EPAM Systems, Inc.'s (NYSE:EPAM) Earnings Haven't Escaped The Attention Of Investors
EPAM Systems, Inc.'s (NYSE:EPAM) Earnings Haven't Escaped The Attention Of Investors
EPAM Systems, Inc.'s (NYSE:EPAM) price-to-earnings (or "P/E") ratio of 35.9x might make it look like a strong sell right now compared to the market in the United States, where around half of the companies have P/E ratios below 16x and even P/E's below 9x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/E.
The recently shrinking earnings for EPAM Systems have been in line with the market. It might be that many expect the company's earnings to strengthen positively despite the tough market conditions, which has kept the P/E from falling. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.
Keen to find out how analysts think EPAM Systems' future stacks up against the industry? In that case, our free report is a great place to start.Does Growth Match The High P/E?
There's an inherent assumption that a company should far outperform the market for P/E ratios like EPAM Systems' to be considered reasonable.
If we review the last year of earnings, dishearteningly the company's profits fell to the tune of 1.5%. This has soured the latest three-year period, which nevertheless managed to deliver a decent 23% overall rise in EPS. So we can start by confirming that the company has generally done a good job of growing earnings over that time, even though it had some hiccups along the way.
Looking ahead now, EPS is anticipated to climb by 14% per year during the coming three years according to the analysts following the company. Meanwhile, the rest of the market is forecast to only expand by 10% per year, which is noticeably less attractive.
In light of this, it's understandable that EPAM Systems' P/E sits above the majority of other companies. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.
What We Can Learn From EPAM Systems' P/E?
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 EPAM Systems' 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.
You should always think about risks. Case in point, we've spotted 1 warning sign for EPAM Systems you should be aware of.
You might be able to find a better investment than EPAM Systems. 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.
EPAM Systems, Inc. 's(紐約證券交易所代碼:EPAM)35.9倍的市盈率(或 “市盈率”)與美國市場相比,目前看上去像是強勁的拋售。在美國,約有一半的公司的市盈率低於16倍,甚至市盈率低於9倍也很常見。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。
EPAM Systems最近收益的萎縮與市場一致。許多人可能預計,儘管市場條件艱難,但該公司的收益仍將積極增長,這使市盈率無法下降。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EPAM Systems的未來與行業對立嗎?在這種情況下,我們的免費報告是一個很好的起點。增長與高市盈率相匹配嗎?
人們固有的假設是,如果像EPAM Systems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,令人沮喪的是,該公司的利潤下降了1.5%。這使最近的三年期惡化,儘管如此,每股收益總體增長了23%。因此,我們可以首先確認該公司在此期間在增加收益方面總體上做得很好,儘管在此過程中遇到了一些小問題。
根據關注該公司的分析師的說法,展望未來,預計未來三年每股收益將每年增長14%。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,EPAM Systems的市盈率高於其他大多數公司是可以理解的。看來大多數投資者都在期待這種強勁的未來增長,並願意爲該股支付更多費用。
我們可以從EPAM Systems的市盈率中學到什麼?
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EPAM Systems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。
你應該時刻考慮風險。舉個例子,我們發現了 EPAM Systems 的 1 個警告信號,你應該注意。
你也許能找到比EPAM系統更好的投資。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)。
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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