Improved Earnings Required Before Motor Oil (Hellas) Corinth Refineries S.A. (ATH:MOH) Shares Find Their Feet

With a price-to-earnings (or "P/E") ratio of 8.6x Motor Oil (Hellas) Corinth Refineries S.A. (ATH:MOH) may be sending bullish signals at the moment, given that almost half of all companies in Greece have P/E ratios greater than 13x and even P/E's higher than 23x are not unusual. However, the P/E might be low for a reason and it requires further investigation to determine if it's justified.

We've discovered 4 warning signs about Motor Oil (Hellas) Corinth Refineries. View them for free.

While the market has experienced earnings growth lately, Motor Oil (Hellas) Corinth Refineries' earnings have gone into reverse gear, which is not great. It seems that many are expecting the dour earnings performance to persist, which has repressed the P/E. If you still like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

Check out our latest analysis for Motor Oil (Hellas) Corinth Refineries

Keen to find out how analysts think Motor Oil (Hellas) Corinth Refineries' future stacks up against the industry? In that case, our free report is a great place to start.

Is There Any Growth For Motor Oil (Hellas) Corinth Refineries?

In order to justify its P/E ratio, Motor Oil (Hellas) Corinth Refineries would need to produce sluggish growth that's trailing the market.

Retrospectively, the last year delivered a frustrating 65% decrease to the company's bottom line. However, a few very strong years before that means that it was still able to grow EPS by an impressive 44% in total over the last three years. Accordingly, while they would have preferred to keep the run going, shareholders would probably welcome the medium-term rates of earnings growth.

Shifting to the future, estimates from the six analysts covering the company suggest earnings should grow by 5.0% over the next year. Meanwhile, the rest of the market is forecast to expand by 10%, which is noticeably more attractive.

In light of this, it's understandable that Motor Oil (Hellas) Corinth Refineries' P/E sits below the majority of other companies. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.

What We Can Learn From Motor Oil (Hellas) Corinth Refineries' P/E?

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.

We've established that Motor Oil (Hellas) Corinth Refineries maintains its low P/E on the weakness of its forecast growth being lower than the wider market, as expected. At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio. It's hard to see the share price rising strongly in the near future under these circumstances.

Before you settle on your opinion, we've discovered 4 warning signs for Motor Oil (Hellas) Corinth Refineries (2 are a bit concerning!) that you should be aware of.

You might be able to find a better investment than Motor Oil (Hellas) Corinth Refineries. 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.