Some Shareholders Feeling Restless Over Zimmer Biomet Holdings, Inc.'s (NYSE:ZBH) P/E Ratio
Some Shareholders Feeling Restless Over Zimmer Biomet Holdings, Inc.'s (NYSE:ZBH) P/E Ratio
With a price-to-earnings (or "P/E") ratio of 25.6x Zimmer Biomet Holdings, Inc. (NYSE:ZBH) 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 16x 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.
Recent times have been pleasing for Zimmer Biomet Holdings as its earnings have risen in spite of the market's earnings going into reverse. The P/E is probably high because investors think the company will continue to navigate the broader market headwinds better than most. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Zimmer Biomet Holdings.What Are Growth Metrics Telling Us About The High P/E?
There's an inherent assumption that a company should far outperform the market for P/E ratios like Zimmer Biomet Holdings' to be considered reasonable.
If we review the last year of earnings growth, the company posted a terrific increase of 254%. However, the latest three year period hasn't been as great in aggregate as it didn't manage to provide any growth at all. So it appears to us that the company has had a mixed result in terms of growing earnings over that time.
Shifting to the future, estimates from the analysts covering the company suggest earnings should grow by 10% per year over the next three years. Meanwhile, the rest of the market is forecast to expand by 10% per annum, which is not materially different.
With this information, we find it interesting that Zimmer Biomet Holdings is trading at a high P/E compared to the market. It seems most investors are ignoring the fairly average growth expectations and are willing to pay up for exposure to the stock. These shareholders may be setting themselves up for disappointment if the P/E falls to levels more in line with the growth outlook.
The Bottom Line On Zimmer Biomet Holdings' P/E
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 Zimmer Biomet Holdings currently trades on a higher than expected P/E since its forecast growth is only in line with the wider market. When we see an average earnings outlook with market-like growth, we suspect the share price is at risk of declining, sending the high P/E lower. Unless these conditions improve, it's challenging to accept these prices as being reasonable.
There are also other vital risk factors to consider before investing and we've discovered 1 warning sign for Zimmer Biomet Holdings that you should be aware of.
You might be able to find a better investment than Zimmer Biomet Holdings. If you want a selection of possible candidates, check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).
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.
Zimmer Biomet Holdings, Inc.(紐約證券交易所代碼:ZBH)的市盈率(或 “市盈率”)爲25.6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16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。
最近令Zimmer Biomet Holdings感到高興,因爲儘管市場的收益出現逆轉,但其收益卻有所增加。市盈率可能很高,因爲投資者認爲該公司將繼續比大多數人更好地應對更廣泛的市場阻力。你真的希望如此,否則你會無緣無故地付出相當大的代價。
如果你想了解分析師對未來的預測,你應該查看我們關於Zimmer Biomet Holdings的免費報告。關於高市盈率,增長指標告訴我們什麼?
人們固有的假設是,如果像Zimmer Biomet Holdings這樣的市盈率被認爲是合理的,公司的表現應該遠遠超過市場。
如果我們回顧一下去年的收益增長,該公司公佈了254%的驚人增長。但是,最近三年的總體表現並不那麼好,因爲它根本沒有帶來任何增長。因此,在我們看來,該公司的收益增長好壞參半。
展望未來,報道該公司的分析師的估計表明,未來三年收益每年將增長10%。同時,預計其餘市場每年將增長10%,這沒有實質性區別。
有了這些信息,我們發現有趣的是,與市場相比,Zimmer Biomet Holdings的市盈率很高。看來大多數投資者無視相當平均的增長預期,願意爲股票敞口付出代價。如果市盈率降至更符合增長前景的水平,這些股東可能會爲失望做好準備。
Zimmer Biomet Holdings 市盈率的底線
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,Zimmer Biomet Holdings目前的市盈率高於預期,因爲其預測的增長僅與整個市場一致。當我們看到具有類似市場增長的平均收益前景時,我們懷疑股價有下跌的風險,從而使高市盈率走低。除非這些條件有所改善,否則很難接受這些合理的價格。
在投資之前,還有其他重要的風險因素需要考慮,我們發現了Zimmer Biomet Holdings的一個警告信號,你應該注意這一點。
你也許能找到比Zimmer Biomet Holdings更好的投資。如果你想選擇可能的候選人,可以免費查看這份有趣的公司名單,這些公司的市盈率很低(但已經證明可以增加收益)。
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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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