Is the Current PEG a Fair Value For Luxoft Holding, Inc. (NYSE:LXFT)?

Checking on the valuation of Luxoft Holding, Inc. (NYSE:LXFT) shares, we can focus on several ratios. One of the quickest ways to determine the projected value of a stock is the price to earnings growth, or PEG ratio. This formula was popularized by Peter Lynch and according to his calculations, a stock which is fairly valued will have a price to earnings ratio equal to its rate of growth. Simply put, a stock with a PEG ratio of 1 would be considered fairly valued. A stock with a ratio of under 1.0 would be undervalued and a stock with a PEG over 1.0 would be considered over valued. Luxoft Holding, Inc. currently has a PEG ratio of 3.51.

There are various factors to examine when looking at what spurs growth in the stock market. Many investors will monitor macro-economic factors that influence the price of shares. Some of these factors include the overall condition of the economy and market sentiment. Following the macro factors, investors may employ a top down approach when viewing the equity markets. This may include starting with a sector poised for growth and filtering down to specific stock that meet the investor’s criteria. Another way to approach the stock market is to view the micro-economic factors that influence stocks. This may include studying company profits, news, and the competence of overall management. Investors will often try to piece together all the different information available in order to select stocks that will have a positive impact on the long-term strength of the portfolio.

Most importantly investors want to know where the stock is headed from here. In order to get a sense of Wall Street sentiment, we can look to equity research analyst estimates. On a one to five ratings scale where 1.0 indicates a Strong Buy, 2.0 indicates a Buy, 3.0 a Hold, 4.0 a Sell and 5.0 a Stong Sell. Luxoft Holding, Inc. (NYSE:LXFT) currently has an average analyst recommendation of 2.90 according to analysts. This is the average number based on the total brokerage firms taken into consideration by Beta Systems Research. The same analysts have a future one-year price target of $53.25 on the shares.

Technical Indicators
In addition to sell-side rational, we can also take a look at some technical indicators. The stock is currently 40.35% away from its 50-day simple moving average and 42.14% away from the 200 day average. Based on a recent trade, the shares are 0.22% away from the 52-week high and 96.03% from the 52-week low. The RSI (Relative Strength Index), which shows price strength by comparing upward and downward close to close movements. An RSI approaching 70 is typically deemed to be nearing overbought status and could be ripe for a pullback. Alternatively an RSI nearing 30 indicates that the stock could be getting oversold and might be considered undervalued. The RSI for Luxoft Holding, Inc.(NYSE:LXFT) currently stands at 85.91.

Performance
Luxoft Holding, Inc. has posted trailing 12 months earnings of $1.51 per share. The company has seen a change of -12.60% earnings per share this year. Analysts are predicting 21.09% for the company next year. The firm is yielding 8.60% return on assets and 10.90% return on equity.

Stock analysis typically falls under the two main categories of fundamental and technical. Fundamental analysis involves diving into company financials. Fundamental analysts study how the company is performing in order to determine whether or not the stock is ready to run. With this type of analysis, investors will be looking at balance sheet strength and gauging how much money the company is giving back to shareholders. After crunching all the numbers, investors can use the information to calculate ratios to help determine if the company is properly valued and worth adding to the portfolio. Technical analysis relies on charting historical stock prices in order to define trends and patterns. The buying and selling of stocks using only technical analysis typically removes any concern for how the company is fairing or even what it actually does. Some indicators that technical analysts use can be super simple and others can be highly complex. Many investors will attempt to study both technicals and fundamentals with the goal of gaining greater knowledge of where the stock has been, and where it might be going.