Winst gevend schreef op 6 september 2020 18:00:
There’s an inherent assumption that a company should underperform the market for P/E ratios like Pharming Group’s to be considered reasonable.
If we review the last year of earnings growth, the company posted a terrific increase of 32%. Although, its longer-term performance hasn’t been as strong with three-year EPS growth being relatively non-existent overall. Therefore, it’s fair to say that earnings growth has been inconsistent recently for the company.
Shifting to the future, estimates from the five analysts covering the company suggest earnings should grow by 26% per year over the next three years. With the market only predicted to deliver 18% per year, the company is positioned for a stronger earnings result.
With this information, we find it odd that Pharming Group is trading at a P/E lower than the market. It looks like most investors are not convinced at all that the company can achieve future growth expectations.
Pharming Group N.V.’s (AMS:PHARM) price-to-earnings (or “P/E”) ratio of 16.8x might make it look like a buy right now compared to the market in the Netherlands, where around half of the companies have P/E ratios above 20x and even P/E’s above 41x are quite common.