Getting In Cheap On Flughafen Wien Aktiengesellschaft (VIE:FLU) Might Be Difficult

When close to half the companies in Austria have price-to-earnings ratios (or "P/E's") below 8x, you may consider Flughafen Wien Aktiengesellschaft (VIE:FLU) as a stock to avoid entirely with its 25.4x P/E ratio. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's so lofty.

With earnings growth that's superior to most other companies of late, Flughafen Wien has been doing relatively well. It seems that many are expecting the strong earnings performance to persist, which has raised the P/E. If not, then existing shareholders might be a little nervous about the viability of the share price.

View our latest analysis for Flughafen Wien

Want the full picture on analyst estimates for the company? Then our free report on Flughafen Wien will help you uncover what's on the horizon.

Is There Enough Growth For Flughafen Wien?

There's an inherent assumption that a company should far outperform the market for P/E ratios like Flughafen Wien's to be considered reasonable.

If we review the last year of earnings growth, the company posted a terrific increase of 62%. However, the latest three year period hasn't been as great in aggregate as it didn't manage to provide any growth at all. So it appears to us that the company has had a mixed result in terms of growing earnings over that time.

Turning to the outlook, the next year should demonstrate the company's robustness, generating growth of 10% as estimated by the only analyst watching the company. Meanwhile, the broader market is forecast to contract by 0.7%, which would indicate the company is doing very well.

With this information, we can see why Flughafen Wien is trading at such a high P/E compared to the market. Right now, investors are willing to pay more for a stock that is shaping up to buck the trend of the broader market going backwards.

The Bottom Line On Flughafen Wien's P/E

Using the price-to-earnings ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

As we suspected, our examination of Flughafen Wien's analyst forecasts revealed that its superior earnings outlook against a shaky market is contributing to its high P/E. At this stage investors feel the potential for a deterioration in earnings isn't great enough to justify a lower P/E ratio. Our only concern is whether its earnings trajectory can keep outperforming under these tough market conditions. Otherwise, it's hard to see the share price falling strongly in the near future under the current growth expectations.

A lot of potential risks can sit within a company's balance sheet. Take a look at our free balance sheet analysis for Flughafen Wien with six simple checks on some of these key factors.

It's important to make sure you look for a great company, not just the first idea you come across. So take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).

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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.