Moog Inc.'s (NYSE:MOG.A) price-to-earnings (or "P/E") ratio of 33.4x might make it look like a strong sell right now compared to the market in the United States, where around half of the companies have P/E ratios below 18x and even P/E's below 10x 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 so lofty.
Earnings have risen firmly for Moog recently, which is pleasing to see. One possibility is that the P/E is high because investors think this respectable earnings growth will be enough to outperform the broader market in the near future. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.
NYSE:MOG.A Price to Earnings Ratio vs Industry July 29th 2024 Although there are no analyst estimates available for Moog, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
How Is Moog's Growth Trending?
There's an inherent assumption that a company should far outperform the market for P/E ratios like Moog's to be considered reasonable.
Retrospectively, the last year delivered a decent 12% gain to the company's bottom line. However, due to its less than impressive performance prior to this period, EPS growth is practically non-existent over the last three years overall. Therefore, it's fair to say that earnings growth has been inconsistent recently for the company.
Weighing that recent medium-term earnings trajectory against the broader market's one-year forecast for expansion of 13% shows it's noticeably less attractive on an annualised basis.
With this information, we find it concerning that Moog is trading at a P/E higher than the market. Apparently many investors in the company are way more bullish than recent times would indicate and aren't willing to let go of their stock at any price. There's a good chance existing shareholders are setting themselves up for future disappointment if the P/E falls to levels more in line with recent growth rates.
The Key Takeaway
It's argued the price-to-earnings ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.
Our examination of Moog revealed its three-year earnings trends aren't impacting its high P/E anywhere near as much as we would have predicted, given they look worse than current market expectations. Right now we are increasingly uncomfortable with the high P/E as this earnings performance isn't likely to support such positive sentiment for long. If recent medium-term earnings trends continue, it will place shareholders' investments at significant risk and potential investors in danger of paying an excessive premium.
You should always think about risks. Case in point, we've spotted 1 warning sign for Moog you should be aware of.
If these risks are making you reconsider your opinion on Moog, explore our interactive list of high quality stocks to get an idea of what else is out there.
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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
Moog Inc. (紐交所:MOG.A) 目前的市盈率(P/E)爲33.4倍,與美國市場上市盈率低於18倍,甚至低於10倍的公司約佔一半相比,看起來似乎是一個強烈的賣出(sell)信號。儘管如此,僅僅從市盈率這一個指標衡量公司的價值是不明智的,因爲高市盈率背後可能有其它的解釋。