Want To Invest In Match Group, Inc. (NASDAQ:MTCH) Today? Read This First

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Looking at Match Group, Inc.’s (NASDAQ:MTCH) fundamentals some investors are wondering if its last closing price of $66.79 represents a good value for money for this high growth stock. Below I will be talking through a basic metric which will help answer this question.

View our latest analysis for Match Group

Exciting times ahead?

Match Group’s extremely high growth potential in the near future is attracting investors. Expectations from 19 analysts are extremely bullish with earnings per share estimated to surge from current levels of $1.804 to $2.485 over the next three years. This results in an annual growth rate of 20%, on average, which signals a market-beating outlook in the upcoming years.

Is MTCH’s share price justifiable by its earnings growth?

MTCH is trading at quite a high price-to-earnings (PE) ratio of 37.03x. This tells us that Match Group is overvalued compared to the US market average ratio of 17.88x , and overvalued based on current earnings compared to the Interactive Media and Services industry average of 28.04x .

NasdaqGS:MTCH Price Estimation Relative to Market, June 24th 2019
NasdaqGS:MTCH Price Estimation Relative to Market, June 24th 2019

We already know that MTCH appears to be overvalued when compared to its industry average. But, to properly examine the value of a high-growth stock such as Match Group, we must reflect its earnings growth into the valuation. I find that the PEG ratio is simple yet effective for this exercise. A PE ratio of 37.03x and expected year-on-year earnings growth of 20% give Match Group a higher PEG ratio of 1.85x. So, when we include the growth factor in our analysis, Match Group appears a bit overvalued , based on the fundamentals.

What this means for you:

MTCH’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 urge you to complete your research by taking a look at the following:

  1. Financial Health: Are MTCH’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 MTCH 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 MTCH’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.