How Does Tungsten Corporation Plc (AIM:TUNG) Compare To The Tech Sector?
Tungsten Corporation Plc (AIM:TUNG), is a GBP£83.25M small-cap, which operates in the software industry based in United Kingdom. Whether it’s the next big thing in tech or an alliance with a partner in another industry, tech companies have plenty of opportunities for their companies to thrive. Tech analysts are forecasting for the entire software tech industry, negative growth in the upcoming year . Today, I’ll take you through the tech sector growth expectations, as well as evaluate whether TUNG is lagging or leading in the industry. Check out our latest analysis for Tungsten
What’s the catalyst for TUNG’s sector growth?
US-based mega-competitors, such as Alphabet, Apple and Facebook, have been and appears to continue to be, the key drivers of industry growth. Many tech companies are repositioning themselves by focusing on high-growth areas such as IBM’s artificial intelligence play in Watson and Adobe’s shift to marketing its product for cloud computing. In the previous year, the industry saw growth of 0.68%, though still underperforming the wider UK stock market. TUNG leads the pack with its impressive earnings growth of 32.40% over the past year. Furthermore, analysts are expecting this trend of above-industry growth to continue, with TUNG poised to deliver a 26.33% growth over the next couple of years.
Is TUNG and the sector relatively cheap?
The software tech sector’s PE is currently hovering around 26x, above the broader UK stock market PE of 18x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry did return a higher 15.71% compared to the market’s 12.78%, which may be indicative of past tailwinds. Since TUNG’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge TUNG’s value is to assume the stock should be relatively in-line with its industry.
What this means for you:
Are you a shareholder? TUNG’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. If you’re bullish on the stock and well-diversified by industry, you may decide to hold onto TUNG as part of your portfolio. However, if you’re relatively concentrated in tech, you may want to value TUNG based on its cash flows to determine if it is overpriced based on its current growth outlook.
Are you a potential investor? If TUNG has been on your watchlist for a while, now may be the time to enter into the stock, if you like its growth prospects and are not highly concentrated in the tech industry. Before you make a decision on the stock, take a look at TUNG’s cash flows and assess whether the stock is trading at a fair price.
For a deeper dive into Tungsten’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other tech stocks instead? Use our free playform to see my list of over 1000 other tech companies trading on the market.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
