The Market Doesn't Like What It Sees From Wilh. Wilhelmsen Holding ASA's (OB:WWI) Earnings Yet

When close to half the companies in Norway have price-to-earnings ratios (or "P/E's") above 11x, you may consider Wilh. Wilhelmsen Holding ASA (OB:WWI) as a highly attractive investment with its 3.4x P/E ratio. However, the P/E might be quite low for a reason and it requires further investigation to determine if it's justified.

While the market has experienced earnings growth lately, Wilh. Wilhelmsen Holding's earnings have gone into reverse gear, which is not great. The P/E is probably low because investors think this poor earnings performance isn't going to get any better. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

See our latest analysis for Wilh. Wilhelmsen Holding

Keen to find out how analysts think Wilh. Wilhelmsen Holding's future stacks up against the industry? In that case, our free report is a great place to start.

How Is Wilh. Wilhelmsen Holding's Growth Trending?

The only time you'd be truly comfortable seeing a P/E as depressed as Wilh. Wilhelmsen Holding's is when the company's growth is on track to lag the market decidedly.

Retrospectively, the last year delivered a frustrating 9.5% 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 145% in total over the last three years. So we can start by confirming that the company has generally done a very good job of growing earnings over that time, even though it had some hiccups along the way.

Turning to the outlook, the next year should generate growth of 19% as estimated by the dual analysts watching the company. With the market predicted to deliver 29% growth , the company is positioned for a weaker earnings result.

In light of this, it's understandable that Wilh. Wilhelmsen Holding's P/E sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

The Final Word

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 Wilh. Wilhelmsen Holding 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 take the next step, you should know about the 1 warning sign for Wilh. Wilhelmsen Holding that we have uncovered.

If P/E ratios interest you, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.