Take Care Before Diving Into The Deep End On Cury Construtora e Incorporadora S.A. (BVMF:CURY3)

With a median price-to-earnings (or "P/E") ratio of close to 9x in Brazil, you could be forgiven for feeling indifferent about Cury Construtora e Incorporadora S.A.'s (BVMF:CURY3) P/E ratio of 9.1x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/E.

Cury Construtora e Incorporadora certainly has been doing a good job lately as it's been growing earnings more than most other companies. It might be that many expect the strong earnings performance to wane, which has kept the P/E from rising. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

View our latest analysis for Cury Construtora e Incorporadora

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Cury Construtora e Incorporadora.

Is There Some Growth For Cury Construtora e Incorporadora?

There's an inherent assumption that a company should be matching the market for P/E ratios like Cury Construtora e Incorporadora's to be considered reasonable.

If we review the last year of earnings growth, the company posted a terrific increase of 55%. The latest three year period has also seen an excellent 146% overall rise in EPS, aided by its short-term performance. Accordingly, shareholders would have probably welcomed those medium-term rates of earnings growth.

Shifting to the future, estimates from the nine analysts covering the company suggest earnings should grow by 29% over the next year. Meanwhile, the rest of the market is forecast to only expand by 17%, which is noticeably less attractive.

In light of this, it's curious that Cury Construtora e Incorporadora's P/E sits in line with the majority of other companies. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.

The Final Word

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.

Our examination of Cury Construtora e Incorporadora's analyst forecasts revealed that its superior earnings outlook isn't contributing to its P/E as much as we would have predicted. When we see a strong earnings outlook with faster-than-market growth, we assume potential risks are what might be placing pressure on the P/E ratio. It appears some are indeed anticipating earnings instability, because these conditions should normally provide a boost to the share price.

Before you take the next step, you should know about the 1 warning sign for Cury Construtora e Incorporadora that we have uncovered.

You might be able to find a better investment than Cury Construtora e Incorporadora. If you want a selection of possible candidates, check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.