With a price-to-earnings (or "P/E") ratio of 23.2x U-Haul Holding Company (NYSE:UHAL) may be sending bearish signals at the moment, given that almost half of all companies in the United States have P/E ratios under 17x and even P/E's lower than 10x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the elevated P/E.
As an illustration, earnings have deteriorated at U-Haul Holding over the last year, which is not ideal at all. One possibility is that the P/E is high because investors think the company will still do enough to outperform the broader market in the near future. If not, then existing shareholders may be quite nervous about the viability of the share price.
NYSE:UHAL Price to Earnings Ratio vs Industry August 14th 2024 Although there are no analyst estimates available for U-Haul Holding, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
Does Growth Match The High P/E?
In order to justify its P/E ratio, U-Haul Holding would need to produce impressive growth in excess of the market.
Taking a look back first, the company's earnings per share growth last year wasn't something to get excited about as it posted a disappointing decline of 33%. This means it has also seen a slide in earnings over the longer-term as EPS is down 35% in total over the last three years. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.
Weighing that medium-term earnings trajectory against the broader market's one-year forecast for expansion of 15% shows it's an unpleasant look.
In light of this, it's alarming that U-Haul Holding's P/E sits above the majority of other companies. It seems most investors are ignoring the recent poor growth rate and are hoping for a turnaround in the company's business prospects. There's a very good chance existing shareholders are setting themselves up for future disappointment if the P/E falls to levels more in line with the recent negative growth rates.
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.
We've established that U-Haul Holding currently trades on a much higher than expected P/E since its recent earnings have been in decline over the medium-term. Right now we are increasingly uncomfortable with the high P/E as this earnings performance is highly unlikely to support such positive sentiment for long. Unless the recent medium-term conditions improve markedly, it's very challenging to accept these prices as being reasonable.
Plus, you should also learn about these 3 warning signs we've spotted with U-Haul Holding (including 1 which is a bit concerning).
If these risks are making you reconsider your opinion on U-Haul Holding, explore our interactive list of high quality stocks to get an idea of what else is out there.
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考虑到在美国,近一半的公司的市盈率低于17倍,甚至低于10倍的股票价格也不算不寻常,U-Haul Holding Company (NYSE:UHAL) 目前的市盈率为23.2倍,可能正在发出消极信号。但我们需要更深入地研究来判断是否有合理的基础来支撑如此高的市盈率。