Motley fool article overvalued20 Oct 2019 15:51
Overvalued To risky for me Will bail out with a small loss in the morning
While shares in Metro might look undervalued on a book value basis, from an earnings perspective, they look quite expensive. City analysts believe the bank will report earnings per share of 12.6p for 2019, rising to 13.9p in 2020. Based on these targets the stock is currently trading at a 2020 P/E of 14.2, roughly double the UK banking industry sector average.
With so many headwinds buffeting the business, I’m not convinced the stock deserves this multiple. I think a more reasonable valuation would be around seven times earnings — in line with the rest of the sector. On that basis, there’s a good chance the stock could fall another 50% from current levels.