您现在的位置是:Focus >>正文
【plymouth 4th of july parade 2023】Is Park Lawn Corporation’s (TSE:PLC) High P/E Ratio A Problem For Investors?
Focus16516人已围观
简介The goal of this article is to teach you how to use price to earnings ratios (P/E ratios). To keep i ...
Theplymouth 4th of july parade 2023 goal of this article is to teach you how to use price to earnings ratios (P/E ratios). To keep it practical, we’ll show how Park Lawn Corporation’s (
TSE:PLC
) P/E ratio could help you assess the value on offer.
Park Lawn has a price to earnings ratio of 62.48
, based on the last twelve months. That corresponds to an earnings yield of approximately 1.6%.
See our latest analysis for Park Lawn
How Do You Calculate A P/E Ratio?
The
formula for price to earnings
is:
Price to Earnings Ratio = Share Price ÷ Earnings per Share (EPS)
Or for Park Lawn:
P/E of 62.48 = CA$22.66 ÷ CA$0.36 (Based on the trailing twelve months to September 2018.)
Is A High P/E Ratio Good?
A higher P/E ratio means that buyers have to pay
a higher price
for each CA$1 the company has earned over the last year. That isn’t a good or a bad thing on its own, but a high P/E means that buyers have a higher opinion of the business’s prospects, relative to stocks with a lower P/E.
How Growth Rates Impact P/E Ratios
If earnings fall then in the future the ‘E’ will be lower. That means unless the share price falls, the P/E will increase in a few years. Then, a higher P/E might scare off shareholders, pushing the share price down.
Park Lawn saw earnings per share decrease by 31% last year. And it has shrunk its earnings per share by 8.3% per year over the last five years. This might lead to muted expectations.
How Does Park Lawn’s P/E Ratio Compare To Its Peers?
The P/E ratio essentially measures market expectations of a company. The image below shows that Park Lawn has a significantly higher P/E than the average (19.2) P/E for companies in the consumer services industry.
TSX:PLC PE PEG Gauge January 1st 19
That means that the market expects Park Lawn will outperform other companies in its industry. Shareholders are clearly optimistic, but the future is always uncertain. So investors should delve deeper. I like to check
if company insiders have been buying or selling
.
A Limitation: P/E Ratios Ignore Debt and Cash In The Bank
It’s important to note that the P/E ratio considers the market capitalization, not the enterprise value. Thus, the metric does not reflect cash or debt held by the company. Hypothetically, a company could reduce its future P/E ratio by spending its cash (or taking on debt) to achieve higher earnings.
Such spending might be good or bad, overall, but the key point here is that you need to look at debt to understand the P/E ratio in context.
Is Debt Impacting Park Lawn’s P/E?
Net debt totals just 9.3% of Park Lawn’s market cap. The market might award it a higher P/E ratio if it had net cash, but its unlikely this low level of net borrowing is having a big impact on the P/E multiple.
Story continues
The Bottom Line On Park Lawn’s P/E Ratio
Park Lawn’s P/E is 62.5 which is way above average (13.1) in the CA market. With modest debt but no EPS growth in the last year, it’s fair to say the P/E implies some optimism about future earnings, from the market.
Investors should be looking to buy stocks that the market is wrong about. People often underestimate remarkable growth — so investors can make money when fast growth is not fully appreciated. So this
free
visualization of the analyst consensus on future earnings
could help you make the
right decision
about whether to buy, sell, or hold.
You might be able to find a better buy than Park Lawn. If you want a selection of possible winners, check out this
free
list of interesting companies that trade on a P/E below 20 (but have proven they can grow earnings).
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at
.
View comments
Tags:
相关文章
4 Top Momentum Stocks Powered by Driehaus Strategy
FocusInvestors who have the propensity to take higher risk can think of investing in momentum stocks to b ...
【Focus】
阅读更多Hut, Hut, Hike! Get Set to Take Our Weekly News Quiz
Focus"Maybe she knows which lawyer won a Super Bowl." (Photo: fizkes/Shutterstock)Welcome to the Ex Post ...
【Focus】
阅读更多Merkel: We'll use 6-month withdrawal period to talk if U.S. quits INF treaty
FocusBERLIN, Feb 1 (Reuters) - If the United States announces it will suspend compliance with the INF nuc ...
【Focus】
阅读更多
热门文章
- What Kind Of Shareholders Hold The Majority In Select Bancorp, Inc.'s (NASDAQ:SLCT) Shares?
- CORRECTED: India's 2016 Iran oil imports hit record high - trade
- The scariest phrase for investors right now: 'Since 2016'
- Ethics Forum: Questions and Answers on Professional Responsibility
- Calculating The Intrinsic Value Of FFI Holdings Limited (ASX:FFI)
- French regulator orders Google to review ads policies
最新文章
-
Are Robust Financials Driving The Recent Rally In Arthur J. Gallagher & Co.'s (NYSE:AJG) Stock?
-
AP Top Extended Financial Headlines at 11:58 p.m. EST
-
Should You Be Tempted To Sell American States Water Company (NYSE:AWR) Because Of Its P/E Ratio?
-
BRIEF-Ronshine China Holdings Posts January Total Contracted Sales Of About Rmb7.51 Bln
-
Terms for Nykredit's and Totalkredit's auctions - Totalkredit A/S
-
Top Picks 2019- PayPal Holdings PYPL
友情链接
- Morgan Stanley Deboards From Cruise Lines, Bearish On Carnival, Norwegian And Royal Caribbean
- China Is Reopening Its Wet Markets. That's Good
- Best Tarot Cards Reading Online By Kasamba Tarot Readers Experts - How To get Free Love Tarot Readings Online
- Have Insiders Been Buying IKONICS Corporation (NASDAQ:IKNX) Shares?
- Why looting, protests and COVID-19 haven't pounded the stock market
- Trump calls for shift in coronavirus strategy to allow for end to lockdowns
- ReSPECT Glioblastoma Clinical Trial Data to be Presented at 2020 Society for Neuro-Oncology Annual Meeting
- AP Top Extended Financial Headlines at 9:52 p.m. EST
- Asian Shares Lower as US-China Tensions Weigh on Investor Sentiment
- Shipping Marketplace uShip Lays Off 65 Employees