Looking at Capital Product Partners LP’s (NASDAQ:CPLP) fundamentals some investors are wondering if its last closing price of $3.08 represents a good value for money for this high growth stock. Let’s look into this by assessing CPLP’s expected growth over the next few years. Check out our latest analysis for Capital Product Partners
Has the CPLP train has slowed down?One reason why investors are attracted to CPLP is the high growth potential in the near future. Expectations from 7 analysts are extremely bullish with earnings forecasted to rise significantly from today’s level of $0.159 to $0.449 over the next three years. This indicates an estimated earnings growth rate of 45.27% per year, on average, which illustrates a highly optimistic outlook in the near term.
Is CPLP available at a good price after accounting for its growth?
Capital Product Partners is available at price-to-earnings ratio of 19.38x, showing us it is overvalued based on current earnings compared to the oil and gas industry average of 13.79x , and overvalued compared to the US market average ratio of 18.55x .
After looking at CPLP’s value based on current earnings, we can see it seems overvalued relative to other companies in the industry. However, since Capital Product Partners is a high-growth stock, we must also account for its earnings growth by using calculation called the PEG ratio. A PE ratio of 19.38x and expected year-on-year earnings growth of 45.27% give Capital Product Partners an extremely low PEG ratio of 0.43x. Based on this growth, Capital Product Partners’s stock can be considered relatively cheap , based on the fundamentals.
What this means for you:
CPLP’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 highly recommend you to complete your research by taking a look at the following:
- Financial Health: Is CPLP’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 CPLP 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 CPLP’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.