Shares of semiconductor company Seagate (STX) fell 7.1% on May 13 to close trading at $44.04. Seagate stock has fallen close to 9% since the start of May 2019. Seagate stock is currently trading 24% above its 52-week low of $35.38 and 27% below its 52-week high of $60.01. The stock has still risen 16% this year despite losing 7.1% on May 13.
Seagate shares are expected to fall because the company generates over 25% of its sales from China (FXI), which is its biggest region in terms of sales. The trade war between the United States and China sent Seagate stock down 11% in 2018.
Is Seagate stock attractive at its current valuation?
Seagate has a forward 2019 PE multiple of 10.6x. In comparison, its EPS are expected to fall 13% in 2019. The company’s PE multiple for 2020 is 17x, while its EPS are expected to rise just 1.9% in 2020.
Analysts expect Seagate’s EPS to rise at a compound annual growth rate of 6.8% over the next five years. Seagate stock seems overvalued despite the recent fall in its stock price.
Wall Street estimates
Of the 27 analysts tracking Seagate, three have given it “buys,” 19 have given it “holds,” and five have given it “sells.” The average 12-month target price for Seagate stands at $50.05, indicating that it’s trading at a discount of 14% to the consensus estimate.