There Is A Reason Cury Construtora e Incorporadora S.A.'s (BVMF:CURY3) Price Is Undemanding

With a price-to-earnings (or "P/E") ratio of 10.2x Cury Construtora e Incorporadora S.A. (BVMF:CURY3) may be sending bullish signals at the moment, given that almost half of all companies in Brazil have P/E ratios greater than 17x and even P/E's higher than 34x are not unusual. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's limited.

Cury Construtora e Incorporadora hasn't been tracking well recently as its declining earnings compare poorly to other companies, which have seen some growth on average. It seems that many are expecting the dour earnings performance to persist, which has repressed the P/E. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

Check out 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 Any Growth For Cury Construtora e Incorporadora?

In order to justify its P/E ratio, Cury Construtora e Incorporadora would need to produce sluggish growth that's trailing the market.

Retrospectively, the last year delivered a frustrating 56% decrease to the company's bottom line. As a result, earnings from three years ago have also fallen 40% overall. Accordingly, shareholders would have felt downbeat about the medium-term rates of earnings growth.

Looking ahead now, EPS is anticipated to climb by 19% during the coming year according to the three analysts following the company. That's shaping up to be materially lower than the 31% growth forecast for the broader market.

With this information, we can see why Cury Construtora e Incorporadora is trading at a P/E lower than the market. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

What We Can Learn From Cury Construtora e Incorporadora's P/E?

We'd say the price-to-earnings ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

We've established that Cury Construtora e Incorporadora maintains its low P/E on the weakness of its forecast growth being lower than the wider market, as expected. Right now shareholders are accepting the low P/E as they concede future earnings probably won't provide any pleasant surprises. It's hard to see the share price rising strongly in the near future under these circumstances.

Don't forget that there may be other risks. For instance, we've identified 1 warning sign for Cury Construtora e Incorporadora that you should be aware of.

If P/E ratios interest you, you may wish to see this free collection of other companies that have grown earnings strongly and trade on P/E's below 20x.

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