To the annoyance of some shareholders, PS International Group Ltd. (NASDAQ:PSIG) shares are down a considerable 28% in the last month, which continues a horrid run for the company. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 93% loss during that time.
Even after such a large drop in price, PS International Group's price-to-earnings (or "P/E") ratio of 4x might still make it look like a strong buy right now compared to the market in the United States, where around half of the companies have P/E ratios above 18x and even P/E's above 32x are quite common. However, the P/E might be quite low for a reason and it requires further investigation to determine if it's justified.
PS International Group certainly has been doing a great job lately as it's been growing earnings at a really rapid pace. It might be that many expect the strong earnings performance to degrade substantially, which has repressed the P/E. If that doesn't eventuate, then existing shareholders have reason to be quite optimistic about the future direction of the share price.
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 PS International Group's earnings, revenue and cash flow.
Does Growth Match The Low P/E?
The only time you'd be truly comfortable seeing a P/E as depressed as PS International Group's is when the company's growth is on track to lag the market decidedly.
If we review the last year of earnings growth, the company posted a terrific increase of 89%. However, this wasn't enough as the latest three year period has seen a very unpleasant 99% drop in EPS in aggregate. Accordingly, shareholders would have felt downbeat about the medium-term rates of earnings growth.
Comparing that to the market, which is predicted to deliver 15% growth in the next 12 months, the company's downward momentum based on recent medium-term earnings results is a sobering picture.
In light of this, it's understandable that PS International Group's P/E would sit below the majority of other companies. However, we think shrinking earnings are unlikely to lead to a stable P/E over the longer term, which could set up shareholders for future disappointment. There's potential for the P/E to fall to even lower levels if the company doesn't improve its profitability.
The Bottom Line On PS International Group's P/E
PS International Group's P/E looks about as weak as its stock price lately. 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 PS International Group maintains its low P/E on the weakness of its sliding earnings over the medium-term, as expected. At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio. Unless the recent medium-term conditions improve, they will continue to form a barrier for the share price around these levels.
You should always think about risks. Case in point, we've spotted 5 warning signs for PS International Group you should be aware of, and 3 of them can't be ignored.
It's important to make sure you look for a great company, not just the first idea you come across. So take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).
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.
令一些股東煩惱的是,PS International Group Ltd.(納斯達克股票代碼:PSIG)的股價在上個月下跌了28%,這延續了該公司的糟糕表現。對於股東來說,最近的下跌結束了災難性的十二個月,在此期間,他們的虧損率爲93%。
即使價格大幅下跌,與美國市場相比,PS International Group的4倍市盈率(或 「市盈率」)仍可能使其看起來像是一個強勁的買盤。在美國,約有一半公司的市盈率超過18倍,甚至市盈率超過32倍也很常見。但是,市盈率可能很低是有原因的,需要進一步調查以確定其是否合理。
PS International Group最近確實做得很好,因爲它的收益增長非常快。許多人可能預計強勁的盈利表現將大幅下滑,這抑制了市盈率。如果最終沒有出現這種情況,那麼現有股東就有理由對股價的未來走向持相當樂觀的態度。
我們沒有分析師的預測,但您可以查看我們關於PS International Group收益、收入和現金流的免費報告,了解最近的趨勢如何爲公司未來做好準備。
增長與低市盈率相匹配嗎?
只有當公司的增長有望明顯落後於市場時,你才能真正放心地看到像PS International Group一樣低迷的市盈率。