Is Knoll Inc's (NYSE:KNL) Stock Available For A Good Price After Accounting For Growth?

Knoll Inc (NYSE:KNL) is considered a high growth stock. However its last closing price of $20.7 left investors wondering whether this growth has already been factored into the share price. Below I will be talking through a basic metric which will help answer this question. View out our latest analysis for Knoll

What can we expect from Knoll in the future?

Analysts are predicting good growth prospects for Knoll over the next couple of years. The consensus forecast from 3 analysts is certainly positive with earnings per share estimated to surge from current levels of $1.652 to $2.311 over the next three years. This results in an annual growth rate of 11.23%, on average, which indicates a solid future in the near term.

Is KNL's share price justified by its earnings growth?

Knoll is trading at quite low price-to-earnings (PE) ratio of 12.53x. This tells us the stock is undervalued relative to the current US market average of 18.19x , and undervalued based on its latest annual earnings update compared to the commercial services average of 18.32x . This multiple is a median of profitable companies of 25 Commercial Services companies in US including Biochar Now, RINO International and Better Environment Concepts.

Given that KNL's price-to-earnings of 12.53x lies below the industry average, this already indicates that the company could be potentially undervalued. However, seeing as Knoll is perceived as a high-growth stock, we must also account for its earnings growth, which is captured in the PEG ratio. A PE ratio of 12.53x and expected year-on-year earnings growth of 11.23% give Knoll an acceptable PEG ratio of 1.12x. Based on this growth, Knoll's stock can be considered slightly overvalued , based on the fundamentals.

What this means for you:

KNL's current overvaluation could signal a potential selling opportunity to reduce your exposure to the stock, or it you're a potential investor, now may not 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 highly recommend you to complete your research by taking a look at the following:

1. Financial Health: Is KNL’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 KNL 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 KNL'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.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.