With a price-to-earnings (or "P/E") ratio of 9.2x Civitas Resources, Inc. (NYSE:CIVI) may be sending 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 32x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/E.
With earnings that are retreating more than the market's of late, Civitas Resources has been very sluggish. 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.
NYSE:CIVI Price to Earnings Ratio vs Industry July 4th 2024 Want the full picture on analyst estimates for the company? Then our free report on Civitas Resources will help you uncover what's on the horizon.
Is There Any Growth For Civitas Resources?
The only time you'd be truly comfortable seeing a P/E as low as Civitas Resources' is when the company's growth is on track to lag the market.
If we review the last year of earnings, dishearteningly the company's profits fell to the tune of 48%. Still, the latest three year period has seen an excellent 541% overall rise in EPS, in spite of its unsatisfying short-term performance. So we can start by confirming that the company has generally done a very good job of growing earnings over that time, even though it had some hiccups along the way.
Shifting to the future, estimates from the seven analysts covering the company suggest earnings should grow by 20% per annum over the next three years. Meanwhile, the rest of the market is forecast to only expand by 10% per year, which is noticeably less attractive.
In light of this, it's peculiar that Civitas Resources' P/E sits below the majority of other companies. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.
What We Can Learn From Civitas Resources' P/E?
It's argued the price-to-earnings ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.
We've established that Civitas Resources currently trades on a much lower than expected P/E since its forecast growth is higher than the wider market. When we see a strong earnings outlook with faster-than-market growth, we assume potential risks are what might be placing significant pressure on the P/E ratio. It appears many are indeed anticipating earnings instability, because these conditions should normally provide a boost to the share price.
It is also worth noting that we have found 4 warning signs for Civitas Resources that you need to take into consideration.
If P/E ratios interest you, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.
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Civitas Resources, Inc.(NYSE:CIVI)目前市盈率(或“P / E”)比率爲9.2倍,可能正在發出積極信號,因爲美國近一半的公司的市盈率大於17倍,甚至市盈率高達32倍也是不尋常的。然而,我們需要深入挖掘,以確定減少市盈率的合理依據。
Civitas Resources的盈利正在遠遠落後於市場,表現非常疲軟。似乎許多人都預計這種慘淡的盈利表現將持續下去,從而壓制了市盈率。如果您仍然喜歡公司,您希望在做出任何決策之前,它的盈利軌跡能夠好轉。或者至少,如果您的計劃是在該股票不受青睞的時候購買一些股票,您希望盈利下滑不會變得更糟。