Many ASX stocks have been brought down to earth over the past six weeks or so, and TechnologyOne Ltd (ASX: TNE) shares are no different.
Between 14 February and 13 March, the S&P/ASX 200 Index (ASX: XJO) tanked by a horrid 9.4%, only narrowly avoiding a 10% technical market correction (which the US markets did not avoid).
Since 13 March, the ASX 200 has rebounded and is up 1.43% from those mid-March lows (today's hefty drop reducing that number).
However, TechnologyOne shares fared worse than the broader market. After hitting a new all-time high of $32.64 a share back in early February, this ASX 200 tech stock hit a new 2025 low of $26.84 on 11 March. That's a peak-to-trough drop of 17.77%.
Today, this ASX tech stock finished trading at $27.97 a share, down a horrid 2.58%. That may be better than the lows we saw last month, but the company is still down more than 14% from its February peak.
TechnologyOne is one of those ASX market darling stocks that always seems to be on the rise, rarely offering compelling buying prices at a bargain. Investors are usually happy to pay up for quality growth stocks, after all. So, does this mean the pullback we are seeing in the TechnologyOne share price is a rare chance to buy this company on sale?
Well, the company is certainly cheaper, we can't deny that. I've long posited that I would personally love to own this company in my own portfolio. After all, TechnolgyOne has been growing its revenues, earnings, and dividends at a healthy clip for years. Over the company's FY2024, for example, TechnologyOne reported a 17% rise in revenues to $515.4 million, as well as an 18% hike in profits before tax to $152.9 million. The company's final dividend for the year was jacked up 16% to 22.45 cents per share.
However, cheaper doesn't mean cheap. At the current pricing, TechnologyOne shares are still trading on a rather lofty price-to-earnings (P/E) ratio of 77.64.
Even that 2025 low from last month only pulled the company down to where it was trading back in November last year. And back then, it was still at a then-record high.
Check it out for yourself:
TechnologyOne is still a quality company growing at a healthy pace. I'd be prepared to pay 40 or perhaps even 50 times earnings for its shares today. But I'm not willing to fork out 77.64. That's not the kind of price I would call anything close to being 'on sale'.
I might be waiting forever for the right price to buy this company, but that's okay. As Charlie Munger once said, "no matter how wonderful a business is, it's not worth an infinite price".
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