This ASX 200 share still looks cheap to me. But don't just take my word for it!

I'm bullish about the earnings growth outlook for this stock.

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There's one S&P/ASX 200 Index (ASX: XJO) share that looks really cheap to me, and I'm not the only one who believes it has good growth potential.

Collins Foods Ltd (ASX: CKF) is a large franchisee of KFC outlets in Australia, Germany and the Netherlands. It also has a relatively small network of Taco Bells in Australia.

The chart below shows that Collins Foods share price has dropped more than 20% since January 2024. A lower share price is part of the reason why I think it's cheap, but it's also the appealing price/earnings (P/E) ratio and potential growth rate.

So, let's look at what makes this ASX 200 share seem such a bargain, in my opinion.

Low forward earnings multiple

I'm very attracted to businesses where the P/E ratio is low, but earnings are compounding at a pleasing rate.

Collins Foods' most recent result showed good same-store sales (SSS) growth and an ongoing increase in its store network, generating pleasing total revenue growth and profit growth.

During the FY24 first-half period, KFC Australia saw SSS growth of 6.6% and KFC Europe SSS growth was 8.8%. KFC Australia expects to open nine to 12 new restaurants in FY24, while KFC Europe is expected to see another three stores open in the FY24 second half.

Collins Foods' continuing operations HY24 revenue grew by 14.3% to $696.5 million, and the underlying net profit after tax (NPAT) rose by 28.7% to $31.2 million.

The broker UBS thinks the ASX 200 share could generate earnings per share (EPS) of 53 cents in FY24, which would put it at 18x forward earnings.

But profit could be much better than that. The broker UBS has projected EPS of 79 cents for FY26, 92 cents for FY27, and $1.03 for FY28. That implies profit could also double over the next four years, which could make the FY24 P/E ratio of 18 very good value, in my opinion.

UBS has a price target of $10.95 on Collins Foods shares, which implies a possible rise of 15% over the next year, though the broker only rates the ASX 200 stock as neutral right now.

Foolish takeaway

I've put my money where my mouth is and recently bought Collins Foods shares for my own portfolio.

I think it's a cheap growth stock and can provide good dividend income. UBS' predictions suggest it could pay a grossed-up dividend yield of 4.4% for FY24 and 9.4% in FY28.

Motley Fool contributor Tristan Harrison has positions in Collins Foods. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Collins Foods. 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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