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Is Sonos Inc (SONO) Stock Trading Below Fair Value?

Wednesday, October 20, 2021 10:42 AM | InvestorsObserver Analysts
Is Sonos Inc (SONO) Stock Trading Below Fair Value?

Sonos Inc (SONO) receives a strong valuation score of 69 from InvestorsObserver analysis. Our proprietary scoring system considers the overall health of the company by looking at the stock's price, earnings, and growth rate to determine if it represents a good value. SONO holds a better value than 69% of stocks at its current price. Investors who are focused on long-term growth through buy-and-hold investing will find the Valuation Rank especially relevant when allocating their assets.

Valuation Rank - 69
SONO gets a 69 Valuation Rank today. Find out what this means to you and get the rest of the rankings on SONO!

Metrics Analysis

SONO has a trailing twelve month Price to Earnings (PE) ratio of 22.7. The historical average of roughly 15 shows a poor value for SONO stock as investors are paying higher share prices relative to the company's earnings. SONO's high trailing PE ratio shows that the firm has been trading above its fair market value recently. Its trailing 12-month earnings per share (EPS) of 1.42 does not justify the stock's current price. However, trailing PE ratios do not factor in the company's projected growth rate, resulting in many newer firms having high PE ratios due to high growth potential enticing investors despite inadequate earnings. SONO's 12-month-forward PE to Growth (PEG) ratio of 0.6 is considered a good value as the market is undervaluing SONO in relation to the company's projected earnings growth. SONO's PEG comes from its forward price to earnings ratio being divided by its growth rate. A PEG ratio of 1 represents a perfect correlation between earnings growth and share price. Due to their incorporation of more fundamentals of a company's overall health and focusing on the future rather than the past, PEG ratios are one of the most used valuation metrics by analysts today.

Summary

SONO's valuation metrics are strong at its current price due to a undervalued PEG ratio despite strong growth. SONO's PE and PEG are better than the market average resulting in a above average valuation score. Click Here to get the full Report on Sonos Inc (SONO) stock.

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