Why We're Not Concerned About Hellenic Telecommunications Organization S.A.'s (ATH:HTO) Share Price

It's not a stretch to say that Hellenic Telecommunications Organization S.A.'s (ATH:HTO) price-to-earnings (or "P/E") ratio of 10.9x right now seems quite "middle-of-the-road" compared to the market in Greece, where the median P/E ratio is around 11x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/E.

Recent times have been advantageous for Hellenic Telecommunications Organization as its earnings have been rising faster 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 you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.

View our latest analysis for Hellenic Telecommunications Organization

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

Does Growth Match The P/E?

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

Retrospectively, the last year delivered an exceptional 42% gain to the company's bottom line. Pleasingly, EPS has also lifted 170% in aggregate from three years ago, thanks to the last 12 months of growth. Therefore, it's fair to say the earnings growth recently has been superb for the company.

Turning to the outlook, the next three years should generate growth of 6.6% per year as estimated by the five analysts watching the company. That's shaping up to be similar to the 8.2% per year growth forecast for the broader market.

With this information, we can see why Hellenic Telecommunications Organization is trading at a fairly similar P/E to the market. It seems most investors are expecting to see average future growth and are only willing to pay a moderate amount for the stock.

The Bottom Line On Hellenic Telecommunications Organization's P/E

It's argued the price-to-earnings ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

We've established that Hellenic Telecommunications Organization maintains its moderate P/E off the back of its forecast growth being in line with the wider market, as expected. Right now shareholders are comfortable with the P/E as they are quite confident future earnings won't throw up any surprises. It's hard to see the share price moving strongly in either direction in the near future under these circumstances.

Before you settle on your opinion, we've discovered 1 warning sign for Hellenic Telecommunications Organization that you should be aware of.

You might be able to find a better investment than Hellenic Telecommunications Organization. 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.