Hamilton Beach Brands Holding Company (NYSE:HBB) shares have had a really impressive month, gaining 49% after a shaky period beforehand. The annual gain comes to 140% following the latest surge, making investors sit up and take notice.
Even after such a large jump in price, Hamilton Beach Brands Holding's price-to-earnings (or "P/E") ratio of 9.9x might still make it look like a buy right now compared to the market in the United States, where around half of the companies have P/E ratios above 17x and even P/E's above 32x 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 limited.
Recent times have been quite advantageous for Hamilton Beach Brands Holding as its earnings have been rising very briskly. It might be that many expect the strong earnings performance to degrade substantially, 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.
NYSE:HBB Price to Earnings Ratio vs Industry August 6th 2024 We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Hamilton Beach Brands Holding's earnings, revenue and cash flow.
What Are Growth Metrics Telling Us About The Low P/E?
Hamilton Beach Brands Holding's P/E ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the market.
If we review the last year of earnings growth, the company posted a terrific increase of 314%. The strong recent performance means it was also able to grow EPS by 69% in total over the last three years. Accordingly, shareholders would have probably welcomed those medium-term rates of earnings growth.
Weighing that recent medium-term earnings trajectory against the broader market's one-year forecast for expansion of 14% shows it's noticeably more attractive on an annualised basis.
With this information, we find it odd that Hamilton Beach Brands Holding is trading at a P/E lower than the market. It looks like most investors are not convinced the company can maintain its recent growth rates.
The Key Takeaway
Hamilton Beach Brands Holding's stock might have been given a solid boost, but its P/E certainly hasn't reached any great heights. Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.
We've established that Hamilton Beach Brands Holding currently trades on a much lower than expected P/E since its recent three-year growth is higher than the wider market forecast. When we see strong earnings with faster-than-market growth, we assume potential risks are what might be placing significant pressure on the P/E ratio. It appears many are indeed anticipating earnings instability, because the persistence of these recent medium-term conditions would normally provide a boost to the share price.
Before you settle on your opinion, we've discovered 2 warning signs for Hamilton Beach Brands Holding that you should be aware of.
If these risks are making you reconsider your opinion on Hamilton Beach Brands Holding, explore our interactive list of high quality stocks to get an idea of what else is out there.
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纽交所上市公司Hamilton Beach Brands Holding Company (NYSE:HBB)股票在经历了一段不稳定时期后,最近一个月表现非常出色,涨幅达49%。最近的猛涨使得该股票年涨幅达到了140%,受到投资者的瞩目。