With a price-to-earnings (or "P/E") ratio of 8.4x Pediatrix Medical Group, Inc. (NYSE:MD) may be sending bullish signals at the moment, given that almost half of all companies in the United States have P/E ratios greater than 17x and even P/E's higher than 31x are not unusual. However, the P/E might be low for a reason and it requires further investigation to determine if it's justified.
Pediatrix Medical Group 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 low because investors think the company's earnings are going to fall away like everyone else's soon. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.
NYSE:MD Price to Earnings Ratio vs Industry February 6th 2024 Keen to find out how analysts think Pediatrix Medical Group's future stacks up against the industry? In that case, our free report is a great place to start.
How Is Pediatrix Medical Group's Growth Trending?
There's an inherent assumption that a company should underperform the market for P/E ratios like Pediatrix Medical Group's to be considered reasonable.
Taking a look back first, we see that the company managed to grow earnings per share by a handy 15% last year. Although, the latest three year period in total hasn't been as good as it didn't manage to provide any growth at all. So it appears to us that the company has had a mixed result in terms of growing earnings over that time.
Turning to the outlook, the next three years should bring diminished returns, with earnings decreasing 3.2% each year as estimated by the eight analysts watching the company. Meanwhile, the broader market is forecast to expand by 10% per year, which paints a poor picture.
With this information, we are not surprised that Pediatrix Medical Group is trading at a P/E lower than the market. However, shrinking earnings are unlikely to lead to a stable P/E over the longer term. There's potential for the P/E to fall to even lower levels if the company doesn't improve its profitability.
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.
As we suspected, our examination of Pediatrix Medical Group's analyst forecasts revealed that its outlook for shrinking earnings is contributing to its low P/E. At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.
Plus, you should also learn about these 2 warning signs we've spotted with Pediatrix Medical Group (including 1 which shouldn't be ignored).
You might be able to find a better investment than Pediatrix Medical Group. If you want a selection of possible candidates, check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).
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Pediatrix Medical Group, Inc.(紐約證券交易所代碼:MD)的市盈率(或 “市盈率”)爲8.4倍,目前可能正在發出看漲信號,因爲美國幾乎有一半公司的市盈率大於17倍,甚至市盈率高於31倍也並不罕見。但是,市盈率之低可能是有原因的,需要進一步調查以確定其是否合理。
Pediatrix Medical Group最近確實做得很好,因爲其收益增長是正的,而大多數其他公司的收益卻在倒退。一種可能性是市盈率很低,因爲投資者認爲該公司的收益將像其他所有人一樣很快下降。如果不是,那麼現有股東就有理由對股價的未來走向非常樂觀。