Main Street Capital Corporation's (NYSE:MAIN) price-to-earnings (or "P/E") ratio of 9.9x might make it look like a buy right now compared to the market in the United States, where around half of the companies have P/E ratios above 17x and even P/E's above 32x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/E.
With its earnings growth in positive territory compared to the declining earnings of most other companies, Main Street Capital has been doing quite well of late. One possibility is that the P/E is low because investors think the company's earnings are going to fall away like everyone else's soon. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.
Keen to find out how analysts think Main Street Capital's future stacks up against the industry? In that case, our free report is a great place to start.
What Are Growth Metrics Telling Us About The Low P/E?
There's an inherent assumption that a company should underperform the market for P/E ratios like Main Street Capital's to be considered reasonable.
If we review the last year of earnings growth, the company posted a terrific increase of 61%. Pleasingly, EPS has also lifted 1,027% in aggregate from three years ago, thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing earnings over that time.
Looking ahead now, EPS is anticipated to slump, contracting by 17% during the coming year according to the six analysts following the company. That's not great when the rest of the market is expected to grow by 12%.
In light of this, it's understandable that Main Street Capital's P/E would sit below the majority of other companies. Nonetheless, there's no guarantee the P/E has reached a floor yet with earnings going in reverse. There's potential for the P/E to fall to even lower levels if the company doesn't improve its profitability.
The Bottom Line On Main Street Capital's P/E
Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.
As we suspected, our examination of Main Street Capital'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. It's hard to see the share price rising strongly in the near future under these circumstances.
There are also other vital risk factors to consider and we've discovered 6 warning signs for Main Street Capital (2 are potentially serious!) that you should be aware of before investing here.
You might be able to find a better investment than Main Street Capital. If you want a selection of possible candidates, check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).
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.
Main Street Capital Corporation(NYSE:MAIN)のP/E比率は9.9倍で、米国市場の企業の約半数が17倍を超えるP/E比率を持ち、32倍を超えるP/E比率が非常に一般的な今、買いのタイミングに見えますが、割り引いたP/E比率の根拠があるかどうかについて少し掘り下げる必要があります。
最近、ほとんどの企業が業績が悪化している中、Main Street Capitalは収益がプラスになり、かなりうまくやっています。一つの可能性は、投資家が同じくみんなのように、この企業の収益がすぐに落ち込むと予想しているため、P/E比率が低いということです。もしそうでなければ、既存株主には株価の将来的な上昇が期待できる理由があります。
Main Street Capitalの将来についてアナリストがどのように考えているかを知りたくありませんか?それなら、無料レポートが最高の情報源です。
低P/Eから成長メトリックは何を示唆していますか?
Main Street CapitalのP/E比率が理にかなっているために、企業が市場で劣ることが前提となっています。
予想通り、Main Street Capitalのアナリスト予測を調べたところ、減少する収益の見通しがP/E比率の低さに寄与していることが判明しました。この段階では、収益の改善の可能性がP/E比率を引き上げるには十分ではないと投資家たちは考えているため、これらの環境下では株価が強く上昇するのを見るのは難しいでしょう。
考慮すべき他の重要なリスク要因もあり、ここで投資する前にMain Street Capitalの6つの警告サイン(2つは重大な可能性があります!)を発見しました。
Main Street Capitalよりも優れた投資先を見つけることができるかもしれません。低いP/E比率で取引される興味深い企業の無料リストをチェックしてください。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。