With a price-to-earnings (or "P/E") ratio of 5.7x Sociedad Química y Minera de Chile S.A. (NYSE:SQM) may be sending very bullish signals at the moment, given that almost half of all companies in the United States have P/E ratios greater than 17x and even P/E's higher than 33x are not unusual. However, the P/E might be quite low for a reason and it requires further investigation to determine if it's justified.
Recent times haven't been advantageous for Sociedad Química y Minera de Chile as its earnings have been falling quicker than most other companies. It seems that many are expecting the dismal earnings performance to persist, which has repressed the P/E. If you still like the company, you'd want its earnings trajectory to turn around before making any decisions. Or at the very least, you'd be hoping the earnings slide doesn't get any worse if your plan is to pick up some stock while it's out of favour.
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Is There Any Growth For Sociedad Química y Minera de Chile?
In order to justify its P/E ratio, Sociedad Química y Minera de Chile would need to produce anemic growth that's substantially trailing the market.
Retrospectively, the last year delivered a frustrating 3.8% decrease to the company's bottom line. Still, the latest three year period has seen an excellent 1,559% overall rise in EPS, in spite of its unsatisfying short-term performance. Accordingly, while they would have preferred to keep the run going, shareholders would probably welcome the medium-term rates of earnings growth.
Shifting to the future, estimates from the analysts covering the company suggest earnings growth is heading into negative territory, declining 9.0% each year over the next three years. With the market predicted to deliver 12% growth per annum, that's a disappointing outcome.
With this information, we are not surprised that Sociedad Química y Minera de Chile is trading at a P/E lower than the market. Nonetheless, there's no guarantee the P/E has reached a floor yet with earnings going in reverse. Even just maintaining these prices could be difficult to achieve as the weak outlook is weighing down the shares.
The Key Takeaway
Generally, our preference is to limit the use of the price-to-earnings ratio to establishing what the market thinks about the overall health of a company.
As we suspected, our examination of Sociedad Química y Minera de Chile's analyst forecasts revealed that its outlook for shrinking earnings is contributing to its low P/E. At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.
It is also worth noting that we have found 3 warning signs for Sociedad Química y Minera de Chile (2 can't be ignored!) that you need to take into consideration.
If you're unsure about the strength of Sociedad Química y Minera de Chile's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Sociedad Química y Minera de Chile S.A.(NYSE:SQM)の株価収益率(「P/E」)は5.7倍であり、米国の半数以上の企業のP/E ratioが17倍を超え、33倍を超えるP/E ratioも珍しくありませんので、現時点で非常に強気なサインを出している可能性があります。しかし、P/E ratioが比較的低くなっている理由について、より詳しく調査する必要があります。
Sociedad Química y Minera de Chileは、多くの他の企業よりも収益が急速に落ちてしまっておりました。そのため、多くの人が収益の弱いパフォーマンスが続くと予想されており、これがP/E ratioを抑制していると推測されます。もし貴方がこれまでこの企業が好きであった場合には、決定を行う前に収益のトラジェクトリーが回復するのを望むでしょう。少なくとも、不人気な時期に株式を買う計画である場合には、収益の下落が悪化しないことを望むでしょう。
Sociedad Química y Minera de Chileの最新の分析をご覧ください
アナリストの予測がどのようになっているかを確認したい場合は、Sociedad Química y Minera de Chileに関する無料レポートをチェックしてください。
Sociedad Química y Minera de Chileには成長余地があるのでしょうか?
Sociedad Química y Minera de ChileのP/E ratioを正当化するには、市場を大幅に下回る低成長が要求されるでしょう。
このような情報を踏まえると、Sociedad Química y Minera de Chileが市場よりもP/E ratioが低くなっていることに驚く必要はありません。それでも、収益が逆転している状況では、P/E ratioが底を打つ保証はありません。株価がこれらの価格を維持するだけでも、望ましい結果を得ることは困難である可能性があります。
私たちが予想したように、Sociedad Química y Minera de Chileのアナリスト予測の分析により、収益の縮小見通しが低いP/E ratioに寄与していることが明らかになりました。この段階では、収益改善の可能性が高すぎず、より高いP/E ratioを正当化するには十分でないと投資家たちは感じていることがわかります。これらの状況が改善しないかぎり、この水準の株価に対するバリアとなり続けます。
さらに、Sociedad Química y Minera de Chileで3つの警告サイン(2つは無視できません!)を発見したことを留意する必要があります。
Sociedad Química y Minera de Chileのビジネスに自信が持てない場合は、見逃しているほかの企業のためのビジネスファンダメンタルズがしっかりとした株式の対話型リストを探索してみてください。