Why We're Not Concerned About Globus Medical, Inc.'s (NYSE:GMED) Share Price
Why We're Not Concerned About Globus Medical, Inc.'s (NYSE:GMED) Share Price
With a price-to-earnings (or "P/E") ratio of 57.1x Globus Medical, Inc. (NYSE:GMED) may be sending very bearish signals at the moment, given that almost half of all companies in the United States have P/E ratios under 17x and even P/E's lower than 9x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/E.
Globus Medical has been struggling lately as its earnings have declined faster than most other companies. It might be that many expect the dismal earnings performance to recover substantially, which has kept the P/E from collapsing. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.
Keen to find out how analysts think Globus Medical'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 High P/E?
Globus Medical's P/E ratio would be typical for a company that's expected to deliver very strong growth, and importantly, perform much better than the market.
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 43%. The last three years don't look nice either as the company has shrunk EPS by 13% in aggregate. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.
Turning to the outlook, the next three years should generate growth of 52% per year as estimated by the analysts watching the company. That's shaping up to be materially higher than the 10% per year growth forecast for the broader market.
In light of this, it's understandable that Globus Medical's P/E sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.
The Final Word
While the price-to-earnings ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of earnings expectations.
As we suspected, our examination of Globus Medical's analyst forecasts revealed that its superior earnings outlook is contributing to its high P/E. Right now shareholders are comfortable with the P/E as they are quite confident future earnings aren't under threat. Unless these conditions change, they will continue to provide strong support to the share price.
And what about other risks? Every company has them, and we've spotted 3 warning signs for Globus Medical you should know about.
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.
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.
Globus Medical, Inc.(紐約證券交易所代碼:GMED)的市盈率(或 “市盈率”)爲57.1倍,目前可能會發出非常看跌的信號,因爲美國幾乎有一半的公司的市盈率低於17倍,甚至市盈率低於9倍也並不罕見。儘管如此,我們需要更深入地挖掘,以確定市盈率大幅上漲是否有合理的基礎。
Globus Medical最近一直處於困境,因爲其收益下降速度快於大多數其他公司。許多人可能預計,慘淡的收益表現將大幅恢復,這阻止了市盈率的暴跌。你真的希望如此,否則你會無緣無故地付出相當大的代價。
想了解分析師如何看待Globus Medical的未來與行業的對立嗎?在這種情況下,我們的免費報告是一個很好的起點。關於高市盈率,增長指標告訴我們什麼?
Globus Medical的市盈率對於一家預計將實現非常強勁的增長,而且重要的是,其表現要好於市場的公司來說是典型的。
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43%的跌幅。過去三年看起來也不太好,因爲該公司的每股收益總共縮減了13%。因此,可以公平地說,最近的收益增長對公司來說是不可取的。
展望來看,根據關注該公司的分析師的估計,未來三年將實現每年52%的增長。這將大大高於整個市場每年10%的增長預期。
有鑑於此,Globus Medical的市盈率高於其他大多數公司是可以理解的。顯然,股東們並不熱衷於轉移可能着眼於更繁榮未來的東西。
最後一句話
雖然市盈率不應該是決定你是否買入股票的決定性因素,但它是衡量收益預期的有力晴雨表。
正如我們所懷疑的那樣,我們對Globus Medical分析師預測的審查顯示,其優異的盈利前景是其高市盈率的原因。目前,股東們對市盈率感到滿意,因爲他們非常有信心未來的收益不會受到威脅。除非這些條件發生變化,否則它們將繼續爲股價提供強有力的支撐。
那其他風險呢?每家公司都有它們,我們已經發現了你應該知道的3個Globus Medical警告信號。
如果你對市盈率感興趣,你可能希望看到這批盈利增長強勁、市盈率低的免費公司。
對這篇文章有反饋嗎?對內容感到擔憂?直接聯繫我們。 或者,給編輯團隊 (at) simplywallst.com 發送電子郵件。
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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