With a price-to-earnings (or "P/E") ratio of 22.3x Tootsie Roll Industries, Inc. (NYSE:TR) may be sending bearish signals at the moment, given that almost half of all companies in the United States have P/E ratios under 18x and even P/E's lower than 10x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the elevated P/E.
Tootsie Roll Industries has been doing a good job lately as it's been growing earnings at a solid pace. It might be that many expect the respectable earnings performance to beat most other companies over the coming period, which has increased investors' willingness to pay up for the stock. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.
NYSE:TR Price to Earnings Ratio vs Industry August 27th 2024 Although there are no analyst estimates available for Tootsie Roll Industries, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
Is There Enough Growth For Tootsie Roll Industries?
In order to justify its P/E ratio, Tootsie Roll Industries would need to produce impressive growth in excess of the market.
Taking a look back first, we see that the company grew earnings per share by an impressive 21% last year. The latest three year period has also seen an excellent 65% overall rise in EPS, aided by its short-term performance. Accordingly, shareholders would have probably welcomed those medium-term rates of earnings growth.
Comparing that to the market, which is only predicted to deliver 15% growth in the next 12 months, the company's momentum is stronger based on recent medium-term annualised earnings results.
With this information, we can see why Tootsie Roll Industries is trading at such a high P/E compared to the market. Presumably shareholders aren't keen to offload something they believe will continue to outmanoeuvre the bourse.
The Final Word
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.
We've established that Tootsie Roll Industries maintains its high P/E on the strength of its recent three-year growth being higher than the wider market forecast, as expected. Right now shareholders are comfortable with the P/E as they are quite confident earnings aren't under threat. Unless the recent medium-term conditions change, they will continue to provide strong support to the share price.
The company's balance sheet is another key area for risk analysis. Take a look at our free balance sheet analysis for Tootsie Roll Industries with six simple checks on some of these key factors.
If you're unsure about the strength of Tootsie Roll Industries' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.
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由於Tootsie Roll Industries, Inc. (紐交所: TR)的市盈率爲22.3倍,這可能在此刻 發出了看跌信號,因爲幾乎一半的美國公司市盈率低於18倍,甚至低於10倍的情況並不罕見。儘管如此,我們需要更深入的挖掘來判斷這種高市盈率是否有理性的依據。
最近Tootsie Roll Industries的業績增長非常不錯。很可能許多人預計在未來一段時間內 ,這家公司將擊敗大多數其他公司的尊貴業績,從而增加了投資者爲這隻股票付出高價的意願。真的希望如此,否則你將爲無特殊原因付出相當可觀的代價。
紐交所: TR 市盈率與行業 板塊對比 2024年8月27日 儘管目前沒有關於Tootsie Roll Industries的分析師預測,但可以通過查看這個免費的數據豐富的可視化工具了解該公司在盈利、營業收入和現金流方面的情況。
Tootsie Roll Industries有足夠的增長來證明其市盈率嗎?爲了證明其市盈率,Tootsie Roll Industries需要產生超過市場的印象深刻的增長。