Yahoo Finance Idex ASA (OB:IDEX): Is Tech An Attractive Sector Play?
Idex ASA (OB:IDEX), is a ØRE1.48B small-cap, which operates in the tech hardware industry based in Norway. The sector has significantly been impacted by technology megatrends, which have changed how industrial and consumer-oriented companies operate. Tech analysts are forecasting for the entire hardware tech industry, a positive double-digit growth of 18.93% in the upcoming year , and a whopping growth of 48.96% over the next couple of years. However this rate still came in below the growth rate of the NO stock market as a whole. Today, I will analyse the industry outlook, and also determine whether Idex is a laggard or leader relative to its tech sector peers. View our latest analysis for Idex
What’s the catalyst for Idex’s sector growth?
The battle for competitive advantage has led businesses to adopt new the cutting-edge technology, or risk being left behind. Many technologies are now coming into their own as their power and speed increase and the cost of delivering them goes down. And some are pursing growth through various strategies including new M&A, collaboration and alliances, as well as cost reduction and organic growth. In the previous year, the industry endured negative growth of -30.32%, underperforming the NO market growth of 8.75%. Idex also endured some headwinds, though to a lesser extent, delivering delivering a negative earnings growth of -15.52% over the past year. Furthermore, analysts are expecting this trend of above-industry growth to continue, with Idex poised to deliver a 64.40% growth over the next couple of years compared to the industry’s 18.93%.
Is Idex and the sector relatively cheap?
The tech hardware industry is trading at a PE ratio of 20.07x, higher than the rest of the NO stock market PE of 13.02x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry returned a similar 11.32% on equities compared to the market’s 10.39%. Since Idex’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Idex’s value is to assume the stock should be relatively in-line with its industry.
Next Steps:
Idex’s industry-beating future is a positive for investors. If Idex 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. However, before you make a decision on the stock, I suggest you look at Idex’s fundamentals in order to build a holistic investment thesis.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Historical Track Record: What has IDEX’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Idex? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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.
