Wise Travel India Limited (NSE:WTICAB) has a price-to-earnings (P/E) ratio of 26.1x, which may be sending a bullish signal at present, given that almost half of Indian companies have P/E ratios above 31x, and it is not uncommon for P/Es to be above 61x. However, there may be a reason for the low P/E, and further investigation is needed to determine if it is justified.
These are very good times for Wise Travel India, with the company's earnings growing sharply. Many are expecting a significant downturn in this strong earnings performance, which may be pushing down the price-to-earnings multiple. If you're interested in the company, you'll hope that's not the case, as that would allow you to buy shares while they're out of favor.
Check out our latest analysis for Wise Travel India
NSEI:WTICAB Price to Earnings Ratio vs. Industry Comparison June 12, 2024 Want a complete picture of the company's earnings, revenue and cash flow? Then our free report on Wise Travel India will help shed light on the company's past performance.
NSEI:WTICAB Price to Earnings Ratio vs. Industry Comparison June 12, 2024 Want a complete picture of the company's earnings, revenue and cash flow? Then our free report on Wise Travel India will help shed light on the company's past performance. What are the growth trends at Wise Travel India?
Wise Travel India's P/E ratio is typical for a company that is expected to have limited growth and, importantly, underperform the market.
Looking back, the company's bottom line grew an exceptional 116% last year, and over the last three years, short-term performance has helped the company's EPS grow an impressive 791% overall, so let's start by looking at the company's strong contributions to revenue growth over that period.
Compared to the market, which is expected to grow by just 25% over the next 12 months, the company's momentum is stronger based on recent mid-year annual earnings results.
Given this, it's odd that Wise Travel India's price-to-earnings multiple is lower than most other companies, as most investors seem unconvinced the company can sustain its recent growth rate.
Key Takeaways
While the price-to-earnings ratio is not a deciding factor in whether or not to buy a stock, it is a very useful barometer for gauging earnings expectations.
We find that Wise Travel India is currently trading at a much lower P/E than expected as its recent three-year growth has outpaced the overall market expectations. Looking at strong earnings accompanied by faster-than-market growth, we believe that potential risks could be putting significant pressure on the P/E ratio. It seems that many are expecting earnings volatility as a continuation of recent medium-term conditions would usually see share prices rise.
For example, you should be aware of the risks – Wise Travel India has 3 warning signs you should be aware of (and 1 that shouldn't be ignored) .
If these risks have you reconsidering your opinion on Wise Travel India, check out our interactive list of high quality stocks to see what other stocks are out there.
Valuation is complicated, but we can help make it simple.
Check out our comprehensive analysis, including fair value estimates, risks and warnings, dividends, insider transactions, financial health and more, to see if Wise Travel India is potentially overvalued or undervalued.
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This article by Simply Wall St is of general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell a stock, and does not take into account your objectives or financial situation. We aim to provide long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned herein.
