Earnings Working Against Ryerson Holding Corporation's (NYSE:RYI) Share Price
Earnings Working Against Ryerson Holding Corporation's (NYSE:RYI) Share Price
With a price-to-earnings (or "P/E") ratio of 7.6x Ryerson Holding Corporation (NYSE:RYI) may be sending very 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 highly reduced P/E.
As an illustration, earnings have deteriorated at Ryerson Holding over the last year, which is not ideal at all. It might be that many expect the disappointing earnings performance to continue or accelerate, which has repressed the P/E. However, if this doesn't eventuate then existing shareholders may be feeling optimistic about the future direction of the share price.
Although there are no analyst estimates available for Ryerson Holding, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.Does Growth Match The Low P/E?
There's an inherent assumption that a company should far underperform the market for P/E ratios like Ryerson Holding's to be considered reasonable.
Retrospectively, the last year delivered a frustrating 60% decrease to the company's bottom line. At least EPS has managed not to go completely backwards from three years ago in aggregate, thanks to the earlier period of growth. So it appears to us that the company has had a mixed result in terms of growing earnings over that time.
Comparing that to the market, which is predicted to deliver 11% growth in the next 12 months, the company's momentum is weaker based on recent medium-term annualised earnings results.
In light of this, it's understandable that Ryerson Holding's P/E sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on to something they believe will continue to trail the bourse.
The Final Word
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.
As we suspected, our examination of Ryerson Holding revealed its three-year earnings trends are contributing to its low P/E, given they look worse than current market expectations. Right now shareholders are accepting the low P/E as they concede future earnings probably won't provide any pleasant surprises. If recent medium-term earnings trends continue, it's hard to see the share price rising strongly in the near future under these circumstances.
Before you take the next step, you should know about the 4 warning signs for Ryerson Holding that we have uncovered.
It's important to make sure you look for a great company, not just the first idea you come across. So take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).
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.
瑞爾森控股公司(紐約證券交易所代碼:RYI)的市盈率(或 “市盈率”)爲7.6倍,目前可能發出了非常看漲的信號,因爲美國幾乎有一半公司的市盈率超過17倍,甚至市盈率高於32倍也並不罕見。儘管如此,我們需要更深入地挖掘,以確定市盈率大幅下降是否有合理的基礎。
舉例來說,瑞爾森控股的收益在過去一年中有所下降,這根本不理想。許多人可能預計,令人失望的收益表現將持續或加速,這抑制了市盈率。但是,如果最終沒有出現這種情況,那麼現有股東可能會對股價的未來走向感到樂觀。
儘管沒有分析師對瑞爾森控股的估計,但請看一下這個免費的數據豐富的可視化圖表,看看該公司的收益、收入和現金流是如何積累的。增長與低市盈率相匹配嗎?
人們固有的假設是,如果像瑞爾森控股這樣的市盈率才算合理,公司的表現應該遠遠低於市場。
回顧過去,去年的公司利潤下降了60%,令人沮喪。由於較早的增長期,至少每股收益總體上沒有與三年前相比完全倒退。因此,在我們看來,該公司的收益增長好壞參半。
相比之下,市場預計將在未來12個月內實現11%的增長,但根據最近的中期年化收益業績,該公司的勢頭較弱。
有鑑於此,瑞爾森控股的市盈率低於其他大多數公司是可以理解的。顯然,許多股東不願意持有他們認爲將繼續落後於交易所的股票。
最後一句話
有人認爲,市盈率是衡量某些行業價值的次要指標,但它可能是一個有力的商業情緒指標。
正如我們所懷疑的那樣,我們對瑞爾森控股的審查顯示,其三年收益趨勢是其低市盈率的原因,因爲這些趨勢看起來不如當前的市場預期。目前,股東們正在接受低市盈率,因爲他們承認未來的收益可能不會帶來任何驚喜。如果最近的中期收益趨勢繼續下去,在這種情況下,很難看到股價在不久的將來強勁上漲。
在採取下一步行動之前,您應該了解我們發現的瑞爾森控股的4個警告信號。
重要的是要確保你尋找一家優秀的公司,而不僅僅是你遇到的第一個想法。因此,來看看這份免費名單,列出了最近收益增長強勁(市盈率低)的有趣公司。
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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