With a median price-to-earnings (or "P/E") ratio of close to 17x in the United States, you could be forgiven for feeling indifferent about Option Care Health, Inc.'s (NASDAQ:OPCH) P/E ratio of 17.8x. Although, it's not wise to simply ignore the P/E without explanation as investors may be disregarding a distinct opportunity or a costly mistake.
Option Care Health 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 deteriorate like the rest, which has kept the P/E from rising. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Option Care Health.
What Are Growth Metrics Telling Us About The P/E?
Option Care Health's P/E ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the market.
If we review the last year of earnings growth, the company posted a terrific increase of 75%. The strong recent performance means it was also able to grow EPS by 3,078% in total over the last three years. So we can start by confirming that the company has done a great job of growing earnings over that time.
Shifting to the future, estimates from the eight analysts covering the company suggest earnings growth is heading into negative territory, declining 1.7% each year over the next three years. That's not great when the rest of the market is expected to grow by 9.9% each year.
In light of this, it's somewhat alarming that Option Care Health's P/E sits in line with the majority of other companies. Apparently many investors in the company reject the analyst cohort's pessimism and aren't willing to let go of their stock right now. Only the boldest would assume these prices are sustainable as these declining earnings are likely to weigh on the share price eventually.
What We Can Learn From Option Care Health's P/E?
Using the price-to-earnings ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.
Our examination of Option Care Health's analyst forecasts revealed that its outlook for shrinking earnings isn't impacting its P/E as much as we would have predicted. When we see a poor outlook with earnings heading backwards, we suspect share price is at risk of declining, sending the moderate P/E lower. Unless these conditions improve, it's challenging to accept these prices as being reasonable.
There are also other vital risk factors to consider and we've discovered 3 warning signs for Option Care Health (1 makes us a bit uncomfortable!) that you should be aware of before investing here.
You might be able to find a better investment than Option Care Health. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
美國的中位市盈率接近17倍,你可能對Option Care Health的市盈率達到17.8倍感到漠不關心,但是沒有解釋就忽略市盈率是不明智的,因爲投資者可能忽略了一個獨特的機會或一個代價高昂的錯誤。
Option Care Health最近的業績表現不錯,盈利增長一直保持在正數,而其他大多數公司的盈利都在下滑,這可能意味着很多人預計強勁的盈利表現將會惡化,這就是市盈率沒有上升的原因。如果你喜歡這家公司,希望它不會像其它公司一樣表現不佳,那麼你可能希望在其股票沒有受到青睞時購入。
如果您想了解分析師對Option Care Health未來的預測,可以查看我們的免費報告。
增長指標告訴我們市盈率的什麼?
Option Care Health的市盈率對於一家預計只能實現適度增長並且重要的是能夠在市場上表現一致的公司來說是典型的。