Does Bruker Corporation’s (NASDAQ:BRKR) August Stock Price Reflect Its Future Growth?

Bruker Corporation (NASDAQ:BRKR) is considered a high-growth stock, but its last closing price of $41.57 left some investors wondering if this high future earnings potential can be rationalized by its current price tag. Let’s take a look at some key metrics to determine whether there’s any value here for current and potential future investors.

Check out our latest analysis for Bruker

Exciting times ahead?

The excitement around Bruker’s growth potential is not unfounded. Expectations from 12 analysts are extremely bullish with earnings forecasted to rise significantly from today’s level of $1.207 to $1.924 over the next three years. This indicates an estimated earnings growth rate of 18% per year, on average, which signals a market-beating outlook in the upcoming years.

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

BRKR is trading at quite a high price-to-earnings (PE) ratio of 34.44x. This tells us that Bruker is overvalued compared to the US market average ratio of 17.55x , and overvalued based on current earnings compared to the Life Sciences industry average of 33.57x .

NasdaqGS:BRKR Price Estimation Relative to Market, August 5th 2019
NasdaqGS:BRKR Price Estimation Relative to Market, August 5th 2019

We understand BRKR seems to be overvalued based on its current earnings, compared to its industry peers. However, seeing as Bruker 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 34.44x and expected year-on-year earnings growth of 18% give Bruker a higher PEG ratio of 1.88x. This tells us that when we include its growth in our analysis Bruker’s stock can be considered a bit overvalued , based on the fundamentals.

What this means for you:

BRKR’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: Are BRKR’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 BRKR 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 BRKR’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.