Sentiment Still Eluding El Puerto de Liverpool, S.A.B. de C.V. (BMV:LIVEPOLC-1)

When close to half the companies in Mexico have price-to-earnings ratios (or "P/E's") above 13x, you may consider El Puerto de Liverpool, S.A.B. de C.V. (BMV:LIVEPOLC-1) as an attractive investment with its 6.3x P/E ratio. However, the P/E might be low for a reason and it requires further investigation to determine if it's justified.

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El Puerto de Liverpool. de could be doing better as its earnings have been going backwards lately while most other companies have been seeing positive earnings growth. The P/E is probably low because investors think this poor earnings performance isn't going to get any better. 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.

View our latest analysis for El Puerto de Liverpool. de

If you'd like to see what analysts are forecasting going forward, you should check out our free report on El Puerto de Liverpool. de.

How Is El Puerto de Liverpool. de's Growth Trending?

There's an inherent assumption that a company should underperform the market for P/E ratios like El Puerto de Liverpool. de's to be considered reasonable.

If we review the last year of earnings, dishearteningly the company's profits fell to the tune of 9.3%. Regardless, EPS has managed to lift by a handy 24% in aggregate from three years ago, thanks to the earlier period of growth. Accordingly, while they would have preferred to keep the run going, shareholders would be roughly satisfied with the medium-term rates of earnings growth.

Looking ahead now, EPS is anticipated to climb by 12% per annum during the coming three years according to the twelve analysts following the company. That's shaping up to be similar to the 10% each year growth forecast for the broader market.

With this information, we find it odd that El Puerto de Liverpool. de is trading at a P/E lower than the market. It may be that most investors are not convinced the company can achieve future growth expectations.

The Final Word

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.

Our examination of El Puerto de Liverpool. de's analyst forecasts revealed that its market-matching earnings outlook isn't contributing to its P/E as much as we would have predicted. When we see an average earnings outlook with market-like growth, we assume potential risks are what might be placing pressure on the P/E ratio. At least the risk of a price drop looks to be subdued, but investors seem to think future earnings could see some volatility.

Don't forget that there may be other risks. For instance, we've identified 1 warning sign for El Puerto de Liverpool. de that you should be aware of.

Of course, you might also be able to find a better stock than El Puerto de Liverpool. de. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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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.