Groupe Open (EPA:OPN), is a €220.3m small-cap, which operates in the IT services industry based in France. The sector has significantly been impacted by technology megatrends, which have changed how industrial and consumer-oriented companies operate. However, more specifically in the IT service industry, tech analysts are forecasting an extremely robust growth of 30.5% in the upcoming year , and a massive triple-digit earnings growth over the next couple of years. Not surprisingly, this rate is more than double the growth rate of the FR stock market as a whole. Today, I will analyse the industry outlook, as well as evaluate whether Groupe Open is lagging or leading in the industry.
See our latest analysis for Groupe Open
What’s the catalyst for Groupe Open’s sector growth?
Many technologies are now coming into their own as their power and speed increase and the cost of delivering them goes down. Over the past year, the industry saw growth in the teens, though still underperforming the wider FR stock market. Groupe Open lags the pack with its lower growth rate of 1.7% over the past year, which indicates the company has been growing at a slower pace than its IT services peers. However, in the upcoming year, Groupe Open is expected to deliver growth in-line with its industry peers, at a growth rate of 30.7%.
Is Groupe Open and the sector relatively cheap?
IT services companies are typically trading at a PE of 20.18x, relatively similar to the rest of the FR stock market PE of 17.04x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. Furthermore, the industry returned a similar 11.3% on equities compared to the market’s 10.8%. On the stock-level, Groupe Open is trading at a PE ratio of 18.26x, which is relatively in-line with the average IT services stock. In terms of returns, Groupe Open generated 10.2% in the past year, which is 1.1% below the IT services sector.
Next Steps:
If Groupe Open has been on your watchlist for a while, now may not be the best time to enter into the stock. The company is an tech industry laggard in terms of its future growth outlook, and is trading relatively in-line with its peers. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the tech sector. However, before you make a decision on the stock, I suggest you look at Groupe Open’s fundamentals in order to build a holistic investment thesis.
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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.
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Historical Track Record: What has OPN’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.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Groupe Open? 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.