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Overpriced: NETGEAR, Inc.? (NASDAQ:NTGR)
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We look at NETGEAR, Inc. (NASDAQ:NTGR) a company in the Communication Equipment industry getting a lot of share market attention at present, to assess if it provides value for investors considering buying or selling it. Currently NETGEAR, Inc. is trading at $30.94 after moving down -1.09% in the previous day of trading. [Trend Analysis]
NTGR is trading with a trailing 12 month P/E multiple of 1547.00 and an estimated forward P/E multiple of 14.57. The stock has an estimated 5 year annual growth of 6.60% and a PEG multiple of 234.39.
Rather than the usual Price to Earnings (P/E) multiple method, we use a slightly different method to assess if NETGEAR, Inc. is potentially a value buy for investors, the PEG ratio (P/E to growth). This PEG multiple takes into account the expected long term growth in earnings of the company rather than merely the growth for one earnings period ahead as forward P/E does.
That is to say, P/E simply doesn’t account for the long term prospects of NTGR. As a rule of thumb, a stock with a PEG of between 0 and 1 is usually considered to be underpriced, between 1 and 2 to be at fair value and over 2 to be overpriced. Based on the PEG ratio of NTGR being 234.39, we consider NETGEAR, Inc. to likely be overpriced.
This analysis means that value buyers who do not currently hold NETGEAR, Inc. (NASDAQ:NTGR) should not consider buying and investors currently holding the stock should consider selling.
The mean analyst 12 month target price for NETGEAR, Inc. (NASDAQ:NTGR) is currently $29.20 or 5.62% below the current price. Additionally, the stock has been as high as $36.70 and as low as $29.20 in the last 52 weeks. Analysts are estimating that NTGR will report earnings per share of $0.46 next quarter.
