We look at Mercer International Inc. (NASDAQ:MERC) [Trend Analysis] a company in the Paper & Paper Products industry currently at the attention of investors, to assess if it provides value for investors considering buying or selling it. Currently Mercer International Inc. is trading at $10.50 after moving down -1.41% in the previous day of trading.
MERC is trading with a trailing 12 month P/E multiple of 11.93 and an estimated forward P/E multiple of 8.41. The stock has an estimated 5 year annual growth of 4.00% and a PEG multiple of 2.98.
Rather than the usual Price to Earnings (P/E) multiple method, we use a slightly different method to assess if Mercer International 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 MERC. 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 MERC being 2.98, we consider Mercer International Inc. to likely be overpriced.
This analysis means that value buyers who do not currently hold Mercer International Inc. (NASDAQ:MERC) should not consider buying and investors currently holding the stock should consider selling.
The mean analyst 12 month target price for Mercer International Inc. (NASDAQ:MERC) is currently $15.00 or 42.86% above the current price. Additionally, the stock has been as high as $15.95 and as low as $9.47 in the last 52 weeks. Analysts are estimating that MERC will report earnings per share of $0.28 next quarter.
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