CSE Global Limited (SGX:544) is considered a high-growth stock, but its last closing price of SGD0.46 left some investors wondering if this high future earnings potential can be rationalized by its current price tag. Let's look into this by assessing 544's expected growth over the next few years.
See our latest analysis for CSE Global
If you are bullish about CSE Global's growth potential then you are certainly not alone. The consensus forecast from 5 analysts is extremely positive with earnings forecasted to rise significantly from today's level of SGD0.0398 to SGD0.0561 over the next three years. On average, this leads to a growth rate of 16% each year, which signals a market-beating outlook in the upcoming years.
Stocks like CSE Global, with a price-to-earnings (P/E) ratio of 11.54x, always catch the eye of investors on the hunt for a bargain. In isolation, this metric can be a bit too simplistic but in comparison to benchmarks, it tells us that 544 is undervalued relative to the current SG market average of 13.1x , and undervalued based on its latest annual earnings update compared to the IT average of 17.41x .
We already know that 544 appears to be undervalued based on its PE ratio, compared to the industry average. However, seeing as CSE Global 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 11.54x and expected year-on-year earnings growth of 16% give CSE Global a very low PEG ratio of 0.73x. This tells us that when we include its growth in our analysis CSE Global's stock can be considered relatively cheap , based on fundamental analysis.
544'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: