Owens Corning (NYSE:OC) is considered a high growth stock. However its last closing price of $48.99 left investors wondering whether this growth has already been factored into the share price. Let’s take a look at some key metrics to determine whether there’s any value here for current and potential future investors.
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Has the OC train has slowed down?
According to the analysts covering the company, the following few years should bring about good growth prospects for Owens Corning. The consensus forecast from 17 analysts is bullish with earnings forecasted to rise significantly from today’s level of $4.522 to $4.971 over the next three years. This results in an annual growth rate of 11%, on average, which signals a market-beating outlook in the upcoming years.
Is OC’s share price justifiable by its earnings growth?
Owens Corning is trading at quite low price-to-earnings (PE) ratio of 10.83x. This tells us the stock is undervalued relative to the current US market average of 17.36x , and undervalued based on its latest annual earnings update compared to the Building average of 18.16x .
Given that OC’s price-to-earnings of 10.83x lies below the industry average, this already indicates that the company could be potentially undervalued. But, since Owens Corning is a high-growth stock, we must also account for its earnings growth by using calculation called the PEG ratio. A PE ratio of 10.83x and expected year-on-year earnings growth of 11% give Owens Corning a low PEG ratio of 1.0x. So, when we include the growth factor in our analysis, Owens Corning appears fairly valued , based on the fundamentals.
What this means for you:
OC’s current undervaluation could signal a potential buying opportunity to increase your exposure to the stock, or it you’re a potential investor, now may be the right time to buy. However, basing your investment decision off one metric alone is certainly not sufficient. There are many things I have not taken into account in this article and the PEG ratio is very one-dimensional. If you have not done so already, I urge you to complete your research by taking a look at the following:
- Financial Health: Are OC’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Past Track Record: Has OC been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of OC’s historicals for more clarity.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.