Sunpower Group Ltd. (SGX:5GD) is considered a high growth stock. However its last closing price of SGD0.575 left investors wondering whether this growth has already been factored into the share price.
Let’s look into this by assessing 5GD’s expected growth over the next few years.
What can we expect from 5GD in the future?
Investors in Sunpower Group have been patiently waiting for the uptick in earnings. If you believe the analysts covering the stock then the following year will be very interesting.
Consensus expectations from market analysts are
with earnings per share estimated to rise from today’s level of
CN¥0.419 to CN¥0.600 over the next three years.
This indicates an estimated earnings growth rate of 13% per year, on average,
which indicates a solid future in the near term.
Is 5GD available at a good price after accounting for its growth?
Sunpower Group is trading at quite low price-to-earnings (PE) ratio of 6.8x. This tells us the stock is
undervalued relative to the current SG market average of 12.79x
undervalued based on its latest annual earnings update compared to the Machinery average of 7.84x
Given that 5GD’s price-to-earnings of 6.8x lies below the industry average, this already indicates that the company could be potentially undervalued.
seeing as Sunpower Group 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 6.8x and expected year-on-year earnings growth of 13% give Sunpower Group
a very low
PEG ratio of 0.51x.
This means that, when we account for Sunpower Group’s growth, the stock can be viewed as
, based on its fundamentals.
What this means for you:
5GD’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
you to complete your research by taking a look at the following:
- Financial Health: Are 5GD’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 5GD 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 5GD’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.
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 firstname.lastname@example.org. 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.
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