MRC Global Inc.'s (NYSE:MRC) price-to-earnings (or "P/E") ratio of 14.3x might make it look like a buy right now compared to the market in the United States, where around half of the companies have P/E ratios above 17x and even P/E's above 32x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/E.
With its earnings growth in positive territory compared to the declining earnings of most other companies, MRC Global has been doing quite well of late. 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:MRC Price to Earnings Ratio vs Industry June 8th 2024 Want the full picture on analyst estimates for the company? Then our free report on MRC Global will help you uncover what's on the horizon.
What Are Growth Metrics Telling Us About The Low P/E?
The only time you'd be truly comfortable seeing a P/E as low as MRC Global's is when the company's growth is on track to lag the market.
If we review the last year of earnings growth, the company posted a worthy increase of 7.8%. 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.
Looking ahead now, EPS is anticipated to climb by 8.7% each year during the coming three years according to the five analysts following the company. With the market predicted to deliver 9.9% growth per year, the company is positioned for a comparable earnings result.
In light of this, it's peculiar that MRC Global's P/E sits below the majority of other companies. It may be that most investors are not convinced the company can achieve future growth expectations.
The Final Word
While the price-to-earnings ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of earnings expectations.
We've established that MRC Global currently trades on a lower than expected P/E since its forecast growth is in line with the wider market. There could be some unobserved threats to earnings preventing the P/E ratio from matching the outlook. It appears some are indeed anticipating earnings instability, because these conditions should normally provide more support to the share price.
It's always necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with MRC Global, and understanding should be part of your investment process.
If P/E ratios interest you, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.
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相较于美国市场上有一半以上公司的市盈率超过17倍,甚至有些公司的市盈率超过32倍,MRC Global Inc.(纽交所:MRC)的市盈率为14.3倍,目前看起来可能是一个不错的买入机会。然而,我们需要深入挖掘,以确定市盈率的降低是否有合理的基础。
与大多数其他公司的收益下降相比,MRC Global 的收益增长仍然保持在积极的区间内。一个可能的解释是,市盈率之所以低,是因为投资者认为这家公司的收益会很快像其他公司一样下降。如果不是这样的话,那么现有股东就有理由对未来股价的走势感到非常乐观。