Lacklustre Performance Is Driving The Williams Companies, Inc.'s (NYSE:WMB) Low P/E
Lacklustre Performance Is Driving The Williams Companies, Inc.'s (NYSE:WMB) Low P/E
The Williams Companies, Inc.'s (NYSE:WMB) price-to-earnings (or "P/E") ratio of 14x might make it look like a buy right now compared to the market in the United States, where around half of the companies have P/E ratios above 17x and even P/E's above 32x are quite common. However, the P/E might be low for a reason and it requires further investigation to determine if it's justified.
Williams Companies certainly has been doing a good job lately as its earnings growth has been positive while most other companies have been seeing their earnings go backwards. It might be that many expect the strong earnings performance to degrade substantially, possibly more than the market, which has repressed the P/E. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.
Want the full picture on analyst estimates for the company? Then our free report on Williams Companies will help you uncover what's on the horizon.How Is Williams Companies' Growth Trending?
There's an inherent assumption that a company should underperform the market for P/E ratios like Williams Companies' to be considered reasonable.
Taking a look back first, we see that the company grew earnings per share by an impressive 60% last year. Pleasingly, EPS has also lifted 1,467% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have probably welcomed those medium-term rates of earnings growth.
Turning to the outlook, the next three years should bring diminished returns, with earnings decreasing 4.7% per year as estimated by the ten analysts watching the company. With the market predicted to deliver 10% growth per year, that's a disappointing outcome.
In light of this, it's understandable that Williams Companies' P/E would sit below the majority of other companies. However, shrinking earnings are unlikely to lead to a stable P/E over the longer term. There's potential for the P/E to fall to even lower levels if the company doesn't improve its profitability.
What We Can Learn From Williams Companies' P/E?
We'd say the price-to-earnings ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.
As we suspected, our examination of Williams Companies' analyst forecasts revealed that its outlook for shrinking earnings is contributing to its low P/E. Right now shareholders are accepting the low P/E as they concede future earnings probably won't provide any pleasant surprises. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.
It's always necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Williams Companies (at least 1 which doesn't sit too well with us), and understanding them should be part of your investment process.
Of course, you might find a fantastic investment by looking at a few good candidates. So take a peek at this free list of companies with a strong growth track record, trading on 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.
威廉姆斯公司。”s(紐約證券交易所代碼:WMB)市盈率(或 “市盈率”)爲14倍,與美國市場相比,目前可能看起來像買入。在美國,約有一半公司的市盈率高於17倍,甚至市盈率高於32倍也很常見。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。
威廉姆斯公司最近肯定做得很好,因爲其收益增長是正的,而大多數其他公司的收益卻在倒退。許多人可能預計,強勁的盈利表現將大幅下降,可能超過抑制市盈率的市場。否則,現有股東有理由對股價的未來走向持相當樂觀的態度。
想全面了解分析師對公司的估計嗎?然後,我們關於威廉姆斯公司的免費報告將幫助您發現即將發生的事情。威廉姆斯公司的增長趨勢如何?
人們固有的假設是,如果像威廉姆斯公司這樣的市盈率才算合理,公司的表現應該低於市場。
首先回顧一下,我們發現該公司去年的每股收益增長了令人印象深刻的60%。令人高興的是,由於過去12個月的增長,每股收益也比三年前增長了1,467%。因此,股東們可能會對這些中期收益增長率表示歡迎。
談到前景,未來三年的回報應該會減少,根據關注該公司的十位分析師的估計,收益每年下降4.7%。預計市場每年將實現10%的增長,這是一個令人失望的結果。
有鑑於此,威廉姆斯公司的市盈率將低於其他大多數公司是可以理解的。但是,從長遠來看,收益萎縮不太可能帶來穩定的市盈率。如果公司不提高盈利能力,市盈率有可能降至更低的水平。
我們可以從威廉姆斯公司的市盈率中學到什麼?
我們可以說,市盈率的力量主要不是作爲估值工具,而是衡量當前投資者情緒和未來預期。
正如我們所懷疑的那樣,我們對威廉姆斯公司分析師預測的審查顯示,其收益萎縮的前景是其低市盈率的原因。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。除非這些條件有所改善,否則它們將繼續構成股價在這些水平附近的障礙。
始終有必要考慮永遠存在的投資風險幽靈。我們已經向威廉姆斯公司發現了兩個警告信號(至少一個對我們來說不太合適),了解它們應該是您投資過程的一部分。
當然,通過尋找一些優秀的候選人,你可能會找到一筆不錯的投資。因此,來看看這份增長記錄強勁、市盈率低的公司的免費名單吧。
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。
風險及免責聲明
- 分享到weixin
- 分享到qq
- 分享到facebook
- 分享到twitter
- 分享到微博
- 粘贴板
使用瀏覽器的分享功能,分享給你的好友吧