Astrana Health, Inc.'s (NASDAQ:ASTH) price-to-earnings (or "P/E") ratio of 31.4x might make it look like a strong sell right now compared to the market in the United States, where around half of the companies have P/E ratios below 16x and even P/E's below 9x 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 lofty.
With its earnings growth in positive territory compared to the declining earnings of most other companies, Astrana Health has been doing quite well of late. It seems that many are expecting the company to continue defying the broader market adversity, which has increased investors' willingness to pay up for the stock. If not, then existing shareholders might be a little nervous about the viability of the share price.
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Is There Enough Growth For Astrana Health?
In order to justify its P/E ratio, Astrana Health would need to produce outstanding growth well in excess of the market.
Taking a look back first, we see that the company grew earnings per share by an impressive 36% last year. However, the latest three year period hasn't been as great in aggregate as it didn't manage to provide any growth at all. Accordingly, shareholders probably wouldn't have been overly satisfied with the unstable medium-term growth rates.
Shifting to the future, estimates from the eight analysts covering the company suggest earnings should grow by 20% per year over the next three years. Meanwhile, the rest of the market is forecast to only expand by 10% each year, which is noticeably less attractive.
With this information, we can see why Astrana Health is trading at such a high P/E compared to the market. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.
The Final Word
Generally, our preference is to limit the use of the price-to-earnings ratio to establishing what the market thinks about the overall health of a company.
As we suspected, our examination of Astrana Health's analyst forecasts revealed that its superior earnings outlook is contributing to its high P/E. Right now shareholders are comfortable with the P/E as they are quite confident future earnings aren't under threat. Unless these conditions change, they will continue to provide strong support to the share price.
It's always necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Astrana Health, and understanding should be part of your investment process.
You might be able to find a better investment than Astrana 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.
Astrana Health, Inc. (NASDAQ: ASTH) 的市盈率(即“P/E”)为31.4倍,相对于美国市场上约一半的公司市盈率低于16倍,甚至低于9倍的情况很常见,所以现在可能看起来像是强售的机会。虽然光看市盈率不明智,因为它本身可能有合理的解释。
近来 Astrana Health 的盈利增长呈现正增长,相较于其他大多数公司的下降,公司表现得十分出色。许多人似乎预期公司将继续挑战整个市场的逆境,这已经提高了投资者为股票支付溢价的意愿。如果没有这样的情况,现有股东可能会对股价的可行性感到有些紧张。
想要了解公司分析师对该公司的完整预测吗?那么我们免费的 Astrana Health 报告将帮助您揭示未来的计划。