There's Reason For Concern Over Weis Markets, Inc.'s (NYSE:WMK) Price
There's Reason For Concern Over Weis Markets, Inc.'s (NYSE:WMK) Price
It's not a stretch to say that Weis Markets, Inc.'s (NYSE:WMK) price-to-earnings (or "P/E") ratio of 16.2x 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.
For instance, Weis Markets' receding earnings in recent times would have to be some food for thought. It might be that many expect the company to put the disappointing earnings performance behind them over the coming period, which has kept the P/E from falling. If you like the company, you'd at least be hoping this is the case so that you could potentially pick up some stock while it's not quite in favour.
We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Weis Markets' earnings, revenue and cash flow.How Is Weis Markets' Growth Trending?
The only time you'd be comfortable seeing a P/E like Weis Markets' is when the company's growth is tracking the market closely.
Taking a look back first, the company's earnings per share growth last year wasn't something to get excited about as it posted a disappointing decline of 17%. This means it has also seen a slide in earnings over the longer-term as EPS is down 13% in total over the last three years. Accordingly, shareholders would have felt downbeat about the medium-term rates of earnings growth.
In contrast to the company, the rest of the market is expected to grow by 11% over the next year, which really puts the company's recent medium-term earnings decline into perspective.
In light of this, it's somewhat alarming that Weis Markets' P/E sits in line with the majority of other companies. Apparently many investors in the company are way less bearish than recent times would indicate and aren't willing to let go of their stock right now. Only the boldest would assume these prices are sustainable as a continuation of recent earnings trends is likely to weigh on the share price eventually.
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.
We've established that Weis Markets currently trades on a higher than expected P/E since its recent earnings have been in decline over the medium-term. When we see earnings heading backwards and underperforming the market forecasts, we suspect the share price is at risk of declining, sending the moderate P/E lower. If recent medium-term earnings trends continue, it will place shareholders' investments at risk and potential investors in danger of paying an unnecessary premium.
Many other vital risk factors can be found on the company's balance sheet. Our free balance sheet analysis for Weis Markets with six simple checks will allow you to discover any risks that could be an issue.
Of course, you might also be able to find a better stock than Weis Markets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.
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.
可以毫不誇張地說 Weis Markets, Inc.與市盈率中位數約爲17倍的美國市場相比,s(紐約證券交易所代碼:WMK)市盈率(或 “市盈率”)目前爲16.2倍似乎相當 “中間路段”。儘管這可能不會引起任何關注,但如果市盈率不合理,投資者可能會錯過潛在的機會或無視迫在眉睫的失望。
例如,Weis Markets最近收益的下降值得深思。許多人可能預計,該公司將在未來一段時間內將令人失望的收益表現拋在腦後,這阻止了市盈率的下降。如果你喜歡這家公司,你至少希望情況確實如此,這樣你就有可能在它不太受青睞的情況下買入一些股票。
我們沒有分析師的預測,但您可以查看我們關於Weis Markets收益、收入和現金流的免費報告,了解最近的趨勢如何爲公司未來做好準備。Weis Markets的增長趨勢如何?
只有當公司的增長密切關注市場時,你才能放心地看到像Weis Markets這樣的市盈率。
首先回顧一下,該公司去年的每股收益增長並不令人興奮,因爲它公佈了令人失望的17%的跌幅。這意味着從長遠來看,其收益也有所下滑,因爲在過去三年中,每股收益總共下降了13%。因此,股東會對中期收益增長率感到悲觀。
與該公司形成鮮明對比的是,預計明年其他市場將增長11%,這確實使該公司近期的中期收益下降成爲可觀的預期。
有鑑於此,Weis Markets的市盈率與其他大多數公司持平,這有點令人震驚。顯然,該公司的許多投資者並不像最近所表明的那樣看跌,他們現在不願意放棄股票。只有最大膽的人才會假設這些價格是可持續的,因爲近期收益趨勢的延續最終可能會壓制股價。
關鍵要點
通常,我們傾向於將市盈率的使用限制在確定市場對公司整體健康狀況的看法上。
我們已經確定,Weis Markets目前的市盈率高於預期,因爲其最近的收益在中期內有所下降。當我們看到收益倒退且表現低於市場預期時,我們懷疑股價有下跌的風險,從而使溫和的市盈率走低。如果最近的中期收益趨勢持續下去,將使股東的投資面臨風險,潛在投資者面臨支付不必要的溢價的危險。
在公司的資產負債表上可以找到許多其他重要的風險因素。我們對Weis Markets的免費資產負債表分析包括六張簡單的支票,將使您發現任何可能存在問題的風險。
當然,你也可以找到比Weis Markets更好的股票。因此,你不妨免費查看其他市盈率合理且收益強勁增長的公司。
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Simply Wall St的這篇文章本質上是籠統的。我們僅使用公正的方法根據歷史數據和分析師的預測提供評論,我們的文章無意作爲財務建議。它不構成買入或賣出任何股票的建議,也沒有考慮到您的目標或財務狀況。我們的目標是爲您提供由基本數據驅動的長期重點分析。請注意,我們的分析可能不考慮最新的價格敏感型公司公告或定性材料。簡而言之,華爾街沒有持有任何上述股票的頭寸。
譯文內容由第三人軟體翻譯。
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