Universal Health Services, Inc. (NYSE:UHS) shareholders have had their patience rewarded with a 25% share price jump in the last month. Looking back a bit further, it's encouraging to see the stock is up 76% in the last year.
Although its price has surged higher, you could still be forgiven for feeling indifferent about Universal Health Services' P/E ratio of 16.2x, since the median price-to-earnings (or "P/E") ratio in the United States is also close to 18x. 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.
Universal Health Services certainly has been doing a good job lately as its earnings growth has been positive while most other companies have been seeing their earnings go backwards. 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 Universal Health Services' future stacks up against the industry? In that case, our free report is a great place to start.
Does Growth Match The P/E?
There's an inherent assumption that a company should be matching the market for P/E ratios like Universal Health Services' to be considered reasonable.
Taking a look back first, we see that the company grew earnings per share by an impressive 42% last year. The latest three year period has also seen a 9.6% overall rise in EPS, aided extensively by its short-term performance. Therefore, it's fair to say the earnings growth recently has been respectable for the company.
Turning to the outlook, the next three years should generate growth of 13% per annum as estimated by the analysts watching the company. With the market only predicted to deliver 10% each year, the company is positioned for a stronger earnings result.
With this information, we find it interesting that Universal Health Services is trading at a fairly similar P/E to the market. It may be that most investors aren't convinced the company can achieve future growth expectations.
What We Can Learn From Universal Health Services' P/E?
Universal Health Services' stock has a lot of momentum behind it lately, which has brought its P/E level with the market. Using the price-to-earnings ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.
Our examination of Universal Health Services' analyst forecasts revealed that its superior earnings outlook isn't contributing to its P/E as much as we would have predicted. There could be some unobserved threats to earnings preventing the P/E ratio from matching the positive outlook. At least the risk of a price drop looks to be subdued, but investors seem to think future earnings could see some volatility.
There are also other vital risk factors to consider before investing and we've discovered 1 warning sign for Universal Health Services that you should be aware of.
If you're unsure about the strength of Universal Health Services' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.
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.
在过去一个月里,Universal Health Services股票价格上涨了25%,这让NYSE:UHS的股东感到非常满意。 进一步回顾,股票在过去一年中上涨了76%。
尽管股价已经飙升,但如果Universal Health Services的市盈率为16.2倍,而美国中位数市盈率(或“市盈率”)也接近18倍,你仍然可以对其感到冷漠。尽管这可能不会引起任何关注,但如果市盈率不合理,投资者可能会失去潜在机会或忽略了即将到来的失望。
最近,Universal Health Services的盈利增长一直是积极的,而其他大部分公司的盈利却在下滑。一个可能性是投资者认为公司的盈利将来会变得不那么弹性。如果不是这样,那么现有股东有理由对股票未来的前景感到乐观。
想知道分析师如何看待Universal Health Services的未来,与行业相比如何?那么,我们的免费报告就是一个很好的开始。
增长是否匹配市盈率?
有一种固有的假设认为,一个公司的市盈率应该与Universal Health Services的市盈率一样,才能被认为是合理的。