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Petards Group plc (LON:PEG), is a UK£14m small-cap, which operates in the software industry based in United Kingdom. Technology has become a vital component of every industry, bringing unprecedented opportunities for growth, along with challenges and competition. Tech analysts are forecasting for the entire software tech industry, a positive double-digit growth of 11% in the upcoming year , and a whopping growth of 66% over the next couple of years. This rate is larger than the growth rate of the UK stock market as a whole. Today, I’ll take you through the tech sector growth expectations, as well as evaluate whether Petards Group is lagging or leading in the industry.
View our latest analysis for Petards Group
What’s the catalyst for Petards Group’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. In the past year, the industry delivered growth in the teens, though still underperforming the wider UK stock market. Petards Group leads the pack with its impressive earnings growth of 33% over the past year. However, analysts are not expecting this industry-beating trend to continue, with future growth expected to be 5.3% compared to the wider software sector growth hovering in the teens next year. As a future industry laggard in growth, Petards Group may be a cheaper stock relative to its peers.
Is Petards Group and the sector relatively cheap?
The software tech industry is trading at a PE ratio of 28.17x, higher than the rest of the UK stock market PE of 17.04x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry returned a similar 13% on equities compared to the market’s 12%. On the stock-level, Petards Group is trading at a lower PE ratio of 9.37x, making it cheaper than the average software stock. In terms of returns, Petards Group generated 17% in the past year, which is 4.0% over the software sector.
Next Steps:
Petards Group is an tech industry laggard in terms of its future growth outlook. This is possibly reflected in the PE ratio, with the stock trading below its peers. If the stock has been on your watchlist for a while, now may be the time to dig deeper. Although the market is expecting lower growth for the company relative to its peers, Petards Group is also trading at a discount, meaning that there could be some value from a potential mispricing. However, before you make a decision on the stock, I suggest you look at Petards Group’s fundamentals in order to build a holistic investment thesis.