Is Tutor Perini Corporation’s (NYSE:TPC) Stock Available For A Good Price After Accounting For Growth?

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Growth expectations for Tutor Perini Corporation (NYSE:TPC) are high, but many investors are starting to ask whether its last close at $13.2 can still be rationalized by the future potential. Let’s take a look at some key metrics to determine whether there’s any value here for current and potential future investors.

See our latest analysis for Tutor Perini

How is TPC going to perform in the future?

Tutor Perini’s growth potential is very attractive. Expectations from 6 analysts are extremely bullish with earnings per share estimated to rise from today’s level of $1.903 to $3.058 over the next three years. This indicates an estimated earnings growth rate of 21% per year, on average, which illustrates a highly optimistic outlook in the near term.

Can TPC’s share price be justified by its earnings growth?

Tutor Perini is available at a price-to-earnings ratio of 6.94x, showing us it is undervalued relative to the current US market average of 18x , and undervalued based on its latest annual earnings update compared to the Construction average of 17.97x .

NYSE:TPC Price Estimation Relative to Market, June 21st 2019
NYSE:TPC Price Estimation Relative to Market, June 21st 2019

Tutor Perini’s price-to-earnings ratio stands at 6.94x, which is low, relative to the industry average. This already suggests that the stock could be undervalued. But, to be able to properly assess the value of a high-growth stock such as Tutor Perini, we must incorporate its earnings growth in our valuation. The PEG ratio is a great calculation to take account of growth in the stock’s valuation. A PE ratio of 6.94x and expected year-on-year earnings growth of 21% give Tutor Perini an extremely low PEG ratio of 0.32x. This means that, when we account for Tutor Perini’s growth, the stock can be viewed as relatively cheap , based on its fundamentals.

What this means for you:

TPC’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:

  1. Financial Health: Are TPC’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.
  2. Past Track Record: Has TPC 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 TPC’s historicals for more clarity.
  3. 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 editorial-team@simplywallst.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.