Österreichische Post AG's (VIE:POST) Price Is Out Of Tune With Earnings

There wouldn't be many who think Österreichische Post AG's (VIE:POST) price-to-earnings (or "P/E") ratio of 16.1x is worth a mention when the median P/E in Austria is similar at about 16x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/E.

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Recent times have been more advantageous for Österreichische Post as its earnings haven't fallen as much as the rest of the market. One possibility is that the P/E is moderate because investors think this relatively better earnings performance might be about to evaporate. If you still like the company, you'd want its earnings trajectory to turn around before making any decisions. But at the very least, you'd be hoping the company doesn't fall back into the pack if your plan is to pick up some stock while it's not in favour.

View our latest analysis for Österreichische Post

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Österreichische Post.

Does Growth Match The P/E?

The only time you'd be comfortable seeing a P/E like Österreichische Post's is when the company's growth is tracking the market closely.

Retrospectively, the last year delivered a frustrating 1.5% decrease to the company's bottom line. Unfortunately, that's brought it right back to where it started three years ago with EPS growth being virtually non-existent overall during that time. Accordingly, shareholders probably wouldn't have been overly satisfied with the unstable medium-term growth rates.

Turning to the outlook, the next three years should generate growth of 5.4% per annum as estimated by the two analysts watching the company. With the market predicted to deliver 9.2% growth per annum, the company is positioned for a weaker earnings result.

In light of this, it's curious that Österreichische Post's P/E sits in line with the majority of other companies. Apparently many investors in the company are less bearish than analysts indicate and aren't willing to let go of their stock right now. These shareholders may be setting themselves up for future disappointment if the P/E falls to levels more in line with the growth outlook.

The Bottom Line On Österreichische Post's P/E

While the price-to-earnings ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of earnings expectations.

We've established that Österreichische Post currently trades on a higher than expected P/E since its forecast growth is lower than the wider market. Right now we are uncomfortable with the P/E as the predicted future earnings aren't likely to support a more positive sentiment for long. This places shareholders' investments at risk and potential investors in danger of paying an unnecessary premium.

There are also other vital risk factors to consider before investing and we've discovered 3 warning signs for Österreichische Post that you should be aware of.

Of course, you might find a fantastic investment by looking at a few good candidates. So take a peek at this free list of companies with a strong growth track record, trading on 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.