Schoeller-Bleckmann Oilfield Equipment Aktiengesellschaft (VIE:SBO) Stocks Shoot Up 31% But Its P/E Still Looks Reasonable

Schoeller-Bleckmann Oilfield Equipment Aktiengesellschaft (VIE:SBO) shareholders have had their patience rewarded with a 31% share price jump in the last month. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 17% over that time.

Although its price has surged higher, you could still be forgiven for feeling indifferent about Schoeller-Bleckmann Oilfield Equipment's P/E ratio of 11.6x, since the median price-to-earnings (or "P/E") ratio in Austria is also close to 13x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/E.

Recent times haven't been advantageous for Schoeller-Bleckmann Oilfield Equipment as its earnings have been falling quicker than most other companies. One possibility is that the P/E is moderate because investors think the company's earnings trend will eventually fall in line with most others in the market. If you still like the company, you'd want its earnings trajectory to turn around before making any decisions. If not, then existing shareholders may be a little nervous about the viability of the share price.

Check out our latest analysis for Schoeller-Bleckmann Oilfield Equipment

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What Are Growth Metrics Telling Us About The P/E?

The only time you'd be comfortable seeing a P/E like Schoeller-Bleckmann Oilfield Equipment's is when the company's growth is tracking the market closely.

Taking a look back first, the company's earnings per share growth last year wasn't something to get excited about as it posted a disappointing decline of 34%. However, a few very strong years before that means that it was still able to grow EPS by an impressive 490% in total over the last three years. So we can start by confirming that the company has generally done a very good job of growing earnings over that time, even though it had some hiccups along the way.

Turning to the outlook, the next year should generate growth of 11% as estimated by the four analysts watching the company. Meanwhile, the rest of the market is forecast to expand by 13%, which is not materially different.

With this information, we can see why Schoeller-Bleckmann Oilfield Equipment is trading at a fairly similar P/E to the market. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

The Final Word

Schoeller-Bleckmann Oilfield Equipment appears to be back in favour with a solid price jump getting its P/E back in line with most other companies. Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

As we suspected, our examination of Schoeller-Bleckmann Oilfield Equipment's analyst forecasts revealed that its market-matching earnings outlook is contributing to its current P/E. Right now shareholders are comfortable with the P/E as they are quite confident future earnings won't throw up any surprises. It's hard to see the share price moving strongly in either direction in the near future under these circumstances.

Don't forget that there may be other risks. For instance, we've identified 3 warning signs for Schoeller-Bleckmann Oilfield Equipment that you should be aware of.

Of course, you might also be able to find a better stock than Schoeller-Bleckmann Oilfield Equipment. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.