A Piece Of The Puzzle Missing From Olin Corporation's (NYSE:OLN) Share Price
A Piece Of The Puzzle Missing From Olin Corporation's (NYSE:OLN) Share Price
When close to half the companies in the United States have price-to-earnings ratios (or "P/E's") above 17x, you may consider Olin Corporation (NYSE:OLN) as an attractive investment with its 14.2x P/E ratio. However, the P/E might be low for a reason and it requires further investigation to determine if it's justified.
With earnings that are retreating more than the market's of late, Olin has been very sluggish. The P/E is probably low because investors think this poor earnings performance isn't going to improve at all. You'd much rather the company wasn't bleeding earnings if you still believe in the business. Or at the very least, you'd be hoping the earnings slide doesn't get any worse if your plan is to pick up some stock while it's out of favour.
Keen to find out how analysts think Olin's future stacks up against the industry? In that case, our free report is a great place to start.Is There Any Growth For Olin?
The only time you'd be truly comfortable seeing a P/E as low as Olin's is when the company's growth is on track to lag the market.
If we review the last year of earnings, dishearteningly the company's profits fell to the tune of 60%. Unfortunately, that's brought it right back to where it started three years ago with EPS growth being virtually non-existent overall during that time. Accordingly, shareholders probably wouldn't have been overly satisfied with the unstable medium-term growth rates.
Shifting to the future, estimates from the analysts covering the company suggest earnings should grow by 29% each year over the next three years. Meanwhile, the rest of the market is forecast to only expand by 10% each year, which is noticeably less attractive.
In light of this, it's peculiar that Olin's P/E sits below the majority of other companies. It looks like most investors are not convinced at all that the company can achieve future growth expectations.
The Bottom Line On Olin's 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 Olin currently trades on a much lower than expected P/E since its forecast growth is higher than the wider market. There could be some major unobserved threats to earnings preventing the P/E ratio from matching the positive outlook. It appears many are indeed anticipating earnings instability, because these conditions should normally provide a boost to the share price.
You always need to take note of risks, for example - Olin has 3 warning signs we think you should be aware of.
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.
當將近一半的美國公司的市盈率(或 “市盈率”)高於17倍時,您可以將奧林公司(紐約證券交易所代碼:OLN)的市盈率爲14.2倍視爲具有吸引力的投資。但是,市盈率之低可能是有原因的,需要進一步調查以確定其是否合理。
由於收益的回落幅度超過了最近的市場,奧林一直非常疲軟。市盈率可能很低,因爲投資者認爲這種糟糕的收益表現根本不會改善。如果你仍然相信公司的業務,你寧願公司不流失收益。或者至少,如果你的計劃是在失寵的時候買入一些股票,你希望收益下滑不會變得更糟。
想了解分析師如何看待奧林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。奧林有增長嗎?
只有當公司的增長有望落後於市場時,你才能真正放心地看到像奧林一樣低的市盈率。
如果我們回顧一下去年的收益,令人沮喪的是,該公司的利潤下降了60%。不幸的是,這使它回到了三年前的起點,在此期間,總體每股收益幾乎不增長。因此,股東們可能不會對不穩定的中期增長率過於滿意。
展望未來,報道該公司的分析師的估計表明,未來三年收益將每年增長29%。同時,預計其餘市場每年僅增長10%,這明顯降低了吸引力。
有鑑於此,奇怪的是,奧林的市盈率低於其他大多數公司。看來大多數投資者根本不相信公司能夠實現未來的增長預期。
奧林市盈率的底線
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,奧林目前的市盈率遠低於預期,因爲其預測的增長高於整個市場。可能存在一些未觀察到的重大收益威脅,使市盈率無法與樂觀的前景相吻合。看來許多人確實在預期收益不穩定,因爲這些條件通常應該會提振股價。
例如,你需要時刻注意風險,Olin 有 3 個警告信號,我們認爲你應該注意。
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。
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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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