When close to half the companies in the United States have price-to-earnings ratios (or "P/E's") below 16x, you may consider Werner Enterprises, Inc. (NASDAQ:WERN) as a stock to avoid entirely with its 26.3x P/E ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/E.
Recent times haven't been advantageous for Werner Enterprises as its earnings have been falling quicker than most other companies. It might be that many expect the dismal earnings performance to recover substantially, which has kept the P/E from collapsing. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Werner Enterprises.
Is There Enough Growth For Werner Enterprises?
Werner Enterprises' P/E ratio would be typical for a company that's expected to deliver very strong growth, and importantly, perform much better than the market.
Retrospectively, the last year delivered a frustrating 62% decrease to the company's bottom line. As a result, earnings from three years ago have also fallen 53% overall. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.
Shifting to the future, estimates from the analysts covering the company suggest earnings should grow by 21% per year over the next three years. With the market only predicted to deliver 10% per year, the company is positioned for a stronger earnings result.
In light of this, it's understandable that Werner Enterprises' P/E sits above the majority of other companies. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.
The Final Word
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 Werner Enterprises maintains its high P/E on the strength of its forecast growth being higher than the wider market, as expected. 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.
Plus, you should also learn about these 3 warning signs we've spotted with Werner Enterprises.
It's important to make sure you look for a great company, not just the first idea you come across. So take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).
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
当美国接近一半的公司的市盈率(“P/E”)低于16倍时,你可能会考虑避免 Werner Enterprises Inc.(纳斯达克:WERN)的股票,其市盈率为26.3倍。尽管如此,我们仍需要深入挖掘,以判断高市盈率是否有合理的基础。
最近的时期并不利于 Werner Enterprises,因为它的盈利下滑速度比大多数其他公司都快。可能有很多人期望糟糕的收益表现有大幅恢复,这也使市盈率未崩溃。你真的希望如此,否则你就为没有明显理由付出了相当高的价格。
如果你想看看分析师未来的预测,你应该查看我们关于 Werner Enterprises 的免费报告。
Werner Enterprises 是否有足够的创业板?
Werner Enterprises 的市盈率对于预计实现非常强劲的增长(重要的是,在市场表现要好得多的公司)是典型的。