NRB Bearings CMP 172. Stop 130. Target 220 / 350. Monthly chart Stock has cleared past 3 plus years consolidation zone in the form of rectanglar breakout with good volumes. Currently stock is positioning itself Oscillator indicators providing momentum signals with the instance of previous breakout positioned post the stoch crossover at oversold zone and stoch k and d crossing 50 line mark, the stock rallying almost 100%. The current scenario is almost a similar setup.
EPS of `5.57 mean a P/E ratio of 30.7 for the Jan 25 ’18 closing price of `171.05. The earnings yield (i.e. E/P) is 3.2%, which is much lower than the current interest rate on long-term bank fixed deposits – leaving no ‘Margin of Safety’. The P/BV stands at 5.14 (based on book value of `33.28) for year-ending Mar ‘17.
What’s your opinion on this ? Is it overvalued ?
Kindly share your thoughts
Thank you
scorpiomanoj
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@kunalshah7707, Market discounts everything inluding fundamentals. Technicals indicating momentum which could possibly be an indication that fundamental numbers could improve going forward. Fundamentals usually lags. By that logic one should always find stocks with high earnings yield (low P/E) and low P/B; There are many number of such stocks available in the market. These fundamental numbers are as on Mar 17. Performance of the company after Mar 17 has not been factored in these numbers, which is probably what technicals is doing.
What’s your opinion on this ? Is it overvalued ?
Kindly share your thoughts
Thank you