Yahoo Finance Should Your Next Investment In Financial Be In Charles Stanley Group plc (LON:CAY)?
Charles Stanley Group plc (LON:CAY), a UK£188.8m small-cap, operates in the capital markets industry, which has been simplifying their business and operating models over the last few years, both for economic reasons and to reduce organizational complexity. Financial services analysts are forecasting for the entire industry, a fairly unexciting growth rate of 9.9% in the upcoming year , and an enormous growth of 50.3% over the next couple of years. This rate is larger than the growth rate of the UK stock market as a whole. Below, I will examine the sector growth prospects, as well as evaluate whether Charles Stanley Group is lagging or leading in the industry.
See our latest analysis for Charles Stanley Group
What’s the catalyst for Charles Stanley Group’s sector growth?
The threat of disintermediation in the capital markets industry is both real and imminent, taking profits away from traditional incumbent financial institutions. Over the past year, the industry saw growth in the twenties, beating the UK market growth of 15.1%. Charles Stanley Group leads the pack with its impressive earnings growth of 39.5% over the past year. However, analysts are expecting its future earnings growth to be more in-line with the industry average, hovering at 9.9% over the next couple of years.
Is Charles Stanley Group and the sector relatively cheap?
The capital markets industry is trading at a PE ratio of 20x, in-line with the UK stock market PE of 17.35x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. Furthermore, the industry returned a similar 10.5% on equities compared to the market’s 12.5%. On the stock-level, Charles Stanley Group is trading at a PE ratio of 21.77x, which is relatively in-line with the average capital markets stock. In terms of returns, Charles Stanley Group generated 8.9% in the past year, which is 1.6% below the capital markets sector.
Next Steps:
Charles Stanley Group’s future growth prospect aligns with that of the broader market and it is trading in-line with its peers. So if you like its growth prospects, you’ll be paying a fair value for the company. If the stock has been on your watchlist for a while, now may be the time to enter. However, before you make a decision on the stock, I suggest you look at Charles Stanley Group’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 CAY’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 Charles Stanley Group? 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
