It's not a stretch to say that Genuine Parts Company's (NYSE:GPC) price-to-earnings (or "P/E") ratio of 14.8x right now seems quite "middle-of-the-road" compared to the market in the United States, where the median P/E ratio is around 17x. While this might not raise any eyebrows, if the P/E ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.
Recent times have been pleasing for Genuine Parts as its earnings have risen in spite of the market's earnings going into reverse. One possibility is that the P/E is moderate because investors think the company's earnings will be less resilient moving forward. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.
Keen to find out how analysts think Genuine Parts' future stacks up against the industry? In that case, our free report is a great place to start.
How Is Genuine Parts' Growth Trending?
There's an inherent assumption that a company should be matching the market for P/E ratios like Genuine Parts' to be considered reasonable.
If we review the last year of earnings growth, the company posted a worthy increase of 2.5%. The latest three year period has also seen an excellent 405% overall rise in EPS, aided somewhat 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 8.2% each year during the coming three years according to the twelve analysts following the company. That's shaping up to be similar to the 10% per year growth forecast for the broader market.
In light of this, it's understandable that Genuine Parts' P/E sits in line with the majority of other companies. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.
What We Can Learn From Genuine Parts' P/E?
We'd say the price-to-earnings ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.
We've established that Genuine Parts maintains its moderate P/E off the back of its forecast growth being in line with the wider market, as expected. At this stage investors feel the potential for an improvement or deterioration in earnings isn't great enough to justify a high or low P/E ratio. Unless these conditions change, they will continue to support the share price at these levels.
Having said that, be aware Genuine Parts is showing 1 warning sign in our investment analysis, you should know about.
You might be able to find a better investment than Genuine Parts. 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
可以毫不夸张地说,Genuine Parts Company (NYSE:GPC) 现在的市盈率为14.8倍,相对于美国市场,其“市盈率中值约为17倍”,似乎相当“middle-of-the-road”。虽然这可能不会引起任何关注,但是如果市盈率不能得到证明,投资者可能会错过潜在的机会或忽略即将到来的失望。
最近 Genuine Parts 的业绩实现了增长,尽管市场业绩出现逆转。一个可能的原因是,投资者认为该公司的盈利将来会减弱,因此市盈率是适度的。如果不是这样,那么现有的股东就有理由对股票价格的未来发展感到乐观。
想知道分析师们如何看待 Genuine Parts 未来与行业竞争?此时,我们的免费报告是一个很好的开始。
Genuine Parts 的增长趋势怎么样?
人们天生就会假定公司的市盈率应该和市场保持一致,像 Genuine Parts 这样的公司被认为是合理的。