What Is Disco Corporation's (TSE:6146) Share Price Doing?

Simply Wall St · 10/16 04:58

Today we're going to take a look at the well-established Disco Corporation (TSE:6146). The company's stock saw a decent share price growth of 16% on the TSE over the last few months. While good news for shareholders, the company has traded much higher in the past year. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Disco’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Disco

What Is Disco Worth?

According to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 43.63x is currently well-above the industry average of 15.85x, meaning that it is trading at a more expensive price relative to its peers. Furthermore, Disco’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach levels around its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

Can we expect growth from Disco?

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TSE:6146 Earnings and Revenue Growth October 16th 2024

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 91% over the next couple of years, the future seems bright for Disco. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? 6146’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe 6146 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on 6146 for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for 6146, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Disco as a business, it's important to be aware of any risks it's facing. For example - Disco has 1 warning sign we think you should be aware of.

If you are no longer interested in Disco, you can use our free platform to see our list of over 50 other stocks with a high growth potential.