APN Property Group Limited (ASX:APD), a AUDA$136.69M small-cap, is a capital market firm operating in an industry, which now face the choice of either being disintermediated or proactively disrupting their own business models to thrive in the future. Financial services analysts are forecasting for the entire industry, a relatively muted growth of 6.82% in the upcoming year , and a massive growth of 41.90% over the next couple of years. This rate is larger than the growth rate of the Australian stock market as a whole. Today, I’ll take you through the sector growth expectations, and also determine whether APN Property Group is a laggard or leader relative to its financial sector peers. See our latest analysis for APN Property Group
What’s the catalyst for APN Property 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. In the past year, the industry delivered growth of 3.16%, though still underperforming the wider Australian stock market. APN Property Group leads the pack with its impressive earnings growth of over 100% last year. This proven growth may make APN Property Group a more expensive stock relative to its peers.
Is APN Property Group and the sector relatively cheap?
The capital markets sector’s PE is currently hovering around 22x, relatively similar to the rest of the Australian stock market PE of 18x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a lower 8.68% compared to the market’s 11.86%, potentially indicative of past headwinds. On the stock-level, APN Property Group is trading at a lower PE ratio of 17x, making it cheaper than the average capital markets stock. In terms of returns, APN Property Group generated 8.55% in the past year, in-line with its industry average.
What this means for you:
Are you a shareholder? APN Property Group recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. In addition to this, its PE is below its capital markets peers, suggesting it is also trading at a relatively cheaper price. Perhaps the market isn’t as bullish of the growth going forward. If your investment thesis of the company hasn’t changed, now may be the right time to accumulate more of APN Property Group, if you’re not already highly concentrated in the stock.
Are you a potential investor? If APN Property Group has been on your watchlist for a while, now may be the best time to enter into the stock. Its industry-beating growth delivered have not been fully accounted for in its shares given its lower PE ratio relative to its peers. Before you make the decision to buy, I recommend you look at other fundamentals factors and see whether there is a reason why the stock may be trading at a discount in the capital markets sector.