TELUS International (Cda) Inc. (NYSE:TIXT) shareholders that were waiting for something to happen have been dealt a blow with a 43% share price drop in the last month. For any long-term shareholders, the last month ends a year to forget by locking in a 58% share price decline.
Since its price has dipped substantially, given about half the companies in the United States have price-to-earnings ratios (or "P/E's") above 18x, you may consider TELUS International (Cda) as an attractive investment with its 13.5x P/E ratio. However, the P/E might be low for a reason and it requires further investigation to determine if it's justified.
Recent times haven't been advantageous for TELUS International (Cda) as its earnings have been falling quicker than most other companies. The P/E is probably low because investors think this poor earnings performance isn't going to improve at all. If you still like the company, you'd want its earnings trajectory to turn around before making any decisions. Or at the very least, you'd be hoping the earnings slide doesn't get any worse if your plan is to pick up some stock while it's out of favour.
Want the full picture on analyst estimates for the company? Then our free report on TELUS International (Cda) will help you uncover what's on the horizon.
What Are Growth Metrics Telling Us About The Low P/E?
There's an inherent assumption that a company should underperform the market for P/E ratios like TELUS International (Cda)'s to be considered reasonable.
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 29%. The last three years don't look nice either as the company has shrunk EPS by 5.4% in aggregate. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.
Looking ahead now, EPS is anticipated to slump, contracting by 11% per annum during the coming three years according to the analysts following the company. Meanwhile, the broader market is forecast to expand by 10% per annum, which paints a poor picture.
In light of this, it's understandable that TELUS International (Cda)'s P/E would sit below the majority of other companies. However, shrinking earnings are unlikely to lead to a stable P/E over the longer term. Even just maintaining these prices could be difficult to achieve as the weak outlook is weighing down the shares.
The Key Takeaway
TELUS International (Cda)'s P/E has taken a tumble along with its share price. We'd say the price-to-earnings ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.
We've established that TELUS International (Cda) maintains its low P/E on the weakness of its forecast for sliding earnings, as expected. Right now shareholders are accepting the low P/E as they concede future earnings probably won't provide any pleasant surprises. It's hard to see the share price rising strongly in the near future under these circumstances.
It is also worth noting that we have found 4 warning signs for TELUS International (Cda) (2 make us uncomfortable!) that you need to take into consideration.
If these risks are making you reconsider your opinion on TELUS International (Cda), explore our interactive list of high quality stocks to get an idea of what else is out there.
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紐交所:TELUS International (Cda) Inc.(紐交所:TIXT)的股東在過去一個月中遭受了43%的股價下跌,對於任何長期持股人來說,過去的一個月只能用糟糕的一年來結束,股價下跌了58%。
由於股價大幅下跌,在美國大約有一半的公司的市盈率高於18倍,您可能會認爲TELUS International (Cda)的13.5倍的市盈率是一個有吸引力的投資。然而,市盈率之所以低可能有原因,需要進一步調查才能確定是否合理。
最近一段時間對TELUS International (Cda)來說並不有利,因爲其盈利下降比大多數其他公司更快。市盈率可能較低是因爲投資者認爲這種糟糕的盈利表現不會有任何改善。如果您仍然喜歡這家公司,您希望其盈利走勢好轉後再做出任何決定。或者至少,如果您計劃在股票行情不好的時候購買一些股票,您希望盈利下滑不會變得更糟。
想要了解關於該公司的分析師預測的完整情況嗎?那麼我們關於TELUS International (Cda)的免費報告將幫助您了解未來的情況。