Up 100% in 3 months, is it too late to buy Nearmap shares?

The Nearmap Ltd (ASX: NEA) share price is up 101.94% from 30 June to date.

That’s a huge increase. In dollar terms, shares in the aerial survey company that cost investors $1.03 apiece three months ago are now swapping hands for $2.07.

It’s even more impressive when considering that the technology sector has been hit by inflation and the impact of rising interest rates. Despite these headwinds, though, the S&P/ASX 200 All Technology Index (ASX: XTX) has also managed to lift 13.17% over the same period.

Investors might wonder if Nearmap’s shares are now expensive to buy and what upside return they could gain from owning them.

Let’s cover some metrics for Nearmap shares and then hear what the experts have to say.

Are Nearmap shares overvalued or beginning to ripen?

A quick glance at some of the company’s metrics might provide hints but not the full story.

Nearmap’s price-to-sales (P/S) ratio is around 7.12, while the industry’s P/S ratio is roughly 39.06. This means it’s significantly less expensive to buy a unit of sales in Nearmap than the aggregate of its peers in the same industry.

Analysts at QVG Capital also believe Nearmap has potential, as shares of Nearmap are part of the company’s portfolio.

Analysts note that although its ratios are not the best of the best, it may not be the right benchmark to use in the first place, stating that “we know near term earnings are the wrong lens [to] view these companies”.

Tech companies often have a long runway to build up to significant earnings and profitability and can be the hardest hit by rising interest rates.

Despite this, QVG Capital believes Nearmap holds similar potential to WiseTech Global Ltd (ASX: WTC) and IDP Education Ltd (ASX: IEL), stating in a memo to clients that they offer “high customer value propositions and good unit economics tend to surprise positively along the journey”.

So it might not be too late to pick up Nearmap shares, at least from their point of view.

Nearmap share price snapshot

The Nearmap share price is up more than 34% this year to date. That’s a significant increase over the S&P/ASX 200 Index (ASX: XJO), which is down by 9.70% for the same period.

The company’s market capitalisation is currently $1.04 billion.

The post Up 100% in 3 months, is it too late to buy Nearmap shares? appeared first on The Motley Fool Australia.

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More reading

• What’s going on with the Nearmap share price on Wednesday?
• 2 ASX shares that look expensive but have years of growth ahead: QVG Capital
• Why EML, Nearmap, NIB, and Nick Scali shares are charging higher
• Nearmap share price jumps 5% on takeover update
• ASX reporting season weekly wrap: Winners and losers

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Idp Education Pty Ltd, Nearmap Ltd., and WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool Australia has recommended Nearmap Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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