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Assessing Super Group (NYSE:SGHC) Valuation After A Strong Q3 Beat And Super Coin Announcement

Simply Wall St · 4d ago

Super Group (NYSE:SGHC) stock is in focus after the company reported Q3 results, with revenue up 25.7% year on year to US$557 million, beating Wall Street expectations and posting a GAAP profit.

See our latest analysis for Super Group (SGHC).

Despite the strong Q3 update and plans such as the upcoming Super Coin launch, recent momentum has been weak. The 90 day share price return shows a decline of 22.20%, in contrast with a very strong 1 year total shareholder return of 81.53% and a 3 year total shareholder return above 2.5x, suggesting longer term investors have still seen substantial gains.

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So with revenue growing, GAAP profit on the board and the stock trading below some analyst targets, is Super Group quietly undervalued here, or is the market already pricing in all the future growth?

Most Popular Narrative: 41.4% Undervalued

With Super Group (SGHC) last closing at US$10.41 and the most followed narrative fair value at US$17.75, the story leans heavily toward undervaluation and hinges on how medium term growth and margins play out.

The analysts have a consensus price target of $15.286 for Super Group (SGHC) based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $17.0, and the most bearish reporting a price target of just $14.0.

Read the complete narrative.

Curious what earnings ramp, revenue path and margin profile have to look like to support that valuation gap? The narrative leans on compounded growth, higher profitability and a future earnings multiple that differs from today. Want to see exactly which assumptions have to line up for that fair value to hold?

Result: Fair Value of $17.75 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this depends on Super Group delivering on ambitious margin and earnings targets while managing regulatory shifts and intense competition that could pressure profitability.

Find out about the key risks to this Super Group (SGHC) narrative.

Build Your Own Super Group (SGHC) Narrative

If you see the story differently or prefer to test the assumptions yourself, you can build a custom view of Super Group in minutes by starting with Do it your way.

A great starting point for your Super Group (SGHC) research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.