It's not a stretch to say that Edgewell Personal Care Company's (NYSE:EPC) price-to-earnings (or "P/E") ratio of 17.1x right now seems quite "middle-of-the-road" compared to the market in the United States, where the median P/E ratio is around 17x. While this might not raise any eyebrows, if the P/E ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.
Edgewell Personal Care certainly has been doing a good job lately as its earnings growth has been positive while most other companies have been seeing their earnings go backwards. One possibility is that the P/E is moderate because investors think the company's earnings will be less resilient moving forward. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.
Keen to find out how analysts think Edgewell Personal Care'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 P/E?
Edgewell Personal Care's P/E ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the market.
If we review the last year of earnings growth, the company posted a worthy increase of 9.7%. The latest three year period has also seen an excellent 85% overall rise in EPS, aided somewhat by its short-term performance. So we can start by confirming that the company has done a great job of growing earnings over that time.
Shifting to the future, estimates from the seven analysts covering the company suggest earnings should grow by 15% each year over the next three years. Meanwhile, the rest of the market is forecast to only expand by 10% each year, which is noticeably less attractive.
In light of this, it's curious that Edgewell Personal Care's P/E sits in line with the majority of other companies. It may be that most investors aren't convinced the company can achieve future growth expectations.
What We Can Learn From Edgewell Personal Care's P/E?
We'd say the price-to-earnings ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.
Our examination of Edgewell Personal Care's analyst forecasts revealed that its superior earnings outlook isn't contributing to its P/E as much as we would have predicted. There could be some unobserved threats to earnings preventing the P/E ratio from matching the positive outlook. It appears some are indeed anticipating earnings instability, because these conditions should normally provide a boost to the share price.
Before you take the next step, you should know about the 2 warning signs for Edgewell Personal Care (1 is potentially serious!) that we have uncovered.
It's important to make sure you look for a great company, not just the first idea you come across. So take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).
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.
Edgewell Personal Care Company(NYSE:EPC)の現在のP/E比率(または「P/E」)17.1倍は、米国市場で中央値のP/E比率が約17倍であることと比較して、かなり「中間的」に見えます。これはまったく注目に値しないとは言えません。 P/E比率が正当化されていない場合、投資家は潜在的な機会を逃したり、迫り来る失望を無視したりする可能性があります。
最近、Edgewell Personal Careは利益成長がプラスになっており、他社の大半が収益性が悪化している中、良い仕事をしていると言えます。P/Eが控え目なのは、将来会社の収益性が低下すると投資家が考えているからかもしれません。そうでなければ、既存株主は株価の将来的な好転について楽観的な気持ちになる理由があります。
Edgewell Personal Careの将来の見通しについてアナリストがどう考えているか知りたいですか?その場合は、当社の無料レポートが素晴らしい出発点になります。
成長指標がP/Eについて私たちに何を教えてくれるのでしょうか?
Edgewell Personal CareのP/E比率は、控えめな成長を期待される企業に典型的であり、重要なことは市場に沿って実施されることです。