Identifying the P / E of the national insurance company Al Wathba PJSC (ADX: AWNIC) is difficult at this time
With a price / earnings (or “P / E”) ratio of 79.5x Al Wathba PJSC National Insurance Company (ADX: AWNIC) can send very bearish signals right now, given that almost half of all UAE companies have P / E ratios below 12x and even P / E below 7x. are not unusual. Nonetheless, we would need to dig a little deeper to determine if there is a rational basis for the very high P / E.
The recent times have been very good for Al Wathba National Insurance Company PJSC as its profits have grown very rapidly. The P / E is likely high because investors believe this strong earnings growth will be enough to outperform the market as a whole in the near future. Otherwise, existing shareholders might be a little worried about the sustainability of the share price.
Check out our latest review for Al Wathba National Insurance Company PJSC
While there are no analyst estimates available for Al Wathba National Insurance Company PJSC, take a look at this free Data-rich visualization to see how the business compares to profit, revenue, and cash flow.
What is the growth trend of the national insurance company Al Wathba PJSC?
There is an inherent assumption that a company would have to far outperform the market for P / E ratios like that of Al Wathba National Insurance Company PJSC to be considered reasonable.
Looking back at the last year of earnings growth, the company posted a tremendous 204% increase. Despite this recent strong growth, he is still struggling to catch up as his three-year EPS has frustratedly declined by 80% overall. Therefore, it is fair to say that profit growth has recently been undesirable for the company.
Weighing this mid-term earnings trajectory against the larger market’s one-year forecast for a 24% expansion shows that it’s an unpleasant aspect.
In light of this, it is alarming that the P / E of national insurance company Al Wathba PJSC ranks above the majority of other companies. Apparently, many of the company’s investors are far more bullish than recent times and are not prepared to give up their shares at any cost. Only the more daring would assume that these prices are sustainable, as the continuation of recent earnings trends is likely to weigh heavily on the futures share price.
The last word
We would say that the power of the price / earnings ratio is not primarily a valuation instrument, but rather a measure of current investor sentiment and future expectations.
Our review of national insurance company Al Wathba PJSC found that its medium-term profit contraction is not affecting its high P / E as much as we would have predicted, given the market is set to grow. When we see earnings retreating and underperforming the market forecast, we suspect that the stock price may fall, causing the high P / E to fall. Unless recent medium-term conditions improve significantly, it is very difficult to accept these prices as reasonable.
It should also be noted that we have found 4 warning signs for Al Wathba National Insurance Company PJSC (2 are a bit rude!) Which you need to take into consideration.
If these risks make you reconsider your opinion of Al Wathba National Insurance Company PJSC, explore our interactive list of high-quality stocks to get a feel for what’s out there.
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