Frontline Plc's (NYSE:FRO) Business And Shares Still Trailing The Market
Frontline Plc's (NYSE:FRO) Business And Shares Still Trailing The Market
Frontline plc's (NYSE:FRO) price-to-earnings (or "P/E") ratio of 7.8x might make it look like a strong 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. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's so limited.
Frontline 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. One possibility is that the P/E is low because investors think the company's earnings are going to fall away like everyone else's soon. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Frontline.What Are Growth Metrics Telling Us About The Low P/E?
The only time you'd be truly comfortable seeing a P/E as depressed as Frontline's is when the company's growth is on track to lag the market decidedly.
Taking a look back first, we see that the company grew earnings per share by an impressive 33% last year. The latest three year period has also seen an excellent 40% overall rise in EPS, aided by its short-term performance. So we can start by confirming that the company has done a great job of growing earnings over that time.
Looking ahead now, EPS is anticipated to climb by 2.7% per annum during the coming three years according to the eight analysts following the company. That's shaping up to be materially lower than the 11% each year growth forecast for the broader market.
In light of this, it's understandable that Frontline's P/E sits below the majority of other companies. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.
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.
We've established that Frontline maintains its low P/E on the weakness of its forecast growth being lower than the wider market, as expected. At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.
Having said that, be aware Frontline is showing 3 warning signs in our investment analysis, and 1 of those doesn't sit too well with us.
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.
與美國市場相比,Frontline plc(紐約證券交易所代碼:FRO)7.8倍的市盈率(或 “市盈率”)可能使其目前看起來像是一個強勁的買盤,美國約有一半的公司的市盈率高於17倍,甚至市盈率高於32倍也很常見。但是,僅按面值計算市盈率是不明智的,因爲可以解釋爲什麼市盈率如此有限。
Frontline最近確實做得很好,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。一種可能性是市盈率很低,因爲投資者認爲該公司的收益將像其他所有人一樣很快下降。如果不是,那麼現有股東就有理由對股價的未來走向非常樂觀。
如果你想了解分析師對未來的預測,你應該查看我們關於Frontline的免費報告。關於低市盈率,增長指標告訴我們什麼?
只有當公司的增長有望明顯落後於市場時,你才能真正放心地看到像Frontline一樣低迷的市盈率。
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33%。在最近的三年中,受短期表現的推動,每股收益總體增長了40%。因此,我們可以首先確認該公司在此期間在增加收益方面做得很好。
根據關注該公司的八位分析師的說法,展望未來,預計未來三年每股收益將每年增長2.7%。這將大大低於整個市場每年11%的增長預期。
有鑑於此,Frontline的市盈率低於其他大多數公司是可以理解的。看來大多數投資者預計未來增長有限,只願意爲股票支付較少的金額。
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。
我們已經確定,Frontline的市盈率維持在較低水平,原因是其預期的增長低於整個市場。在現階段,投資者認爲,收益改善的可能性不足以證明更高的市盈率是合理的。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。
話雖如此,請注意,Frontline在我們的投資分析中顯示了3個警告信號,其中一個不太適合我們。
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。
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