Consensus Cloud Solutions, Inc. (NASDAQ:CCSI) shares have continued their recent momentum with a 26% gain in the last month alone. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 35% in the last twelve months.
Even after such a large jump in price, given about half the companies in the United States have price-to-earnings ratios (or "P/E's") above 19x, you may still consider Consensus Cloud Solutions as a highly attractive investment with its 4.6x P/E ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly reduced P/E.
Recent times have been pleasing for Consensus Cloud Solutions as its earnings have risen in spite of the market's earnings going into reverse. 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 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 out of favour.
NasdaqGS:CCSI Price to Earnings Ratio vs Industry July 24th 2024 Keen to find out how analysts think Consensus Cloud Solutions' future stacks up against the industry? In that case, our free report is a great place to start.
What Are Growth Metrics Telling Us About The Low P/E?
There's an inherent assumption that a company should far underperform the market for P/E ratios like Consensus Cloud Solutions' to be considered reasonable.
Taking a look back first, we see that the company grew earnings per share by an impressive 30% last year. Despite this strong recent growth, it's still struggling to catch up as its three-year EPS frustratingly shrank by 27% overall. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.
Looking ahead now, EPS is anticipated to climb by 0.2% during the coming year according to the six analysts following the company. That's shaping up to be materially lower than the 13% growth forecast for the broader market.
In light of this, it's understandable that Consensus Cloud Solutions' 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.
What We Can Learn From Consensus Cloud Solutions' P/E?
Consensus Cloud Solutions' recent share price jump still sees its P/E sitting firmly flat on the ground. While the price-to-earnings ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of earnings expectations.
We've established that Consensus Cloud Solutions maintains its low P/E on the weakness of its forecast growth being lower than the wider market, as expected. Right now shareholders are accepting the low P/E as they concede future earnings probably won't provide any pleasant surprises. It's hard to see the share price rising strongly in the near future under these circumstances.
You need to take note of risks, for example - Consensus Cloud Solutions has 3 warning signs (and 2 which are a bit unpleasant) we think you should know about.
Of course, you might also be able to find a better stock than Consensus Cloud Solutions. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.
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在過去一個月裏,Consensus Cloud Solutions, Inc. (NASDAQ:CCSI)股票已經持續了其最近的勢頭,並且增長了26%。由於該公司的股價在過去十二個月中下跌了35%,因此並非所有股東都會感到欣喜。
即使在如此大幅上漲之後,考慮到美國約一半的公司的市盈率(或稱“ P / E”)在19倍以上,您可能仍認爲Consensus Cloud Solutions是一個極具吸引力的投資,其市盈率爲4.6倍。但是,我們需要更深入地挖掘,以確定高度降低的市盈率是否有合理的基礎。