Hutchison Port Holdings Trust (SGX:NS8U) Not Lagging Market On Growth Or Pricing

When close to half the companies in Singapore have price-to-earnings ratios (or "P/E's") below 12x, you may consider Hutchison Port Holdings Trust (SGX:NS8U) as a stock to avoid entirely with its 22.3x P/E ratio. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's so lofty.

Hutchison Port Holdings Trust has been struggling lately as its earnings have declined faster than most other companies. One possibility is that the P/E is high because investors think the company will turn things around completely and accelerate past most others in the market. If not, then existing shareholders may be very nervous about the viability of the share price.

Check out our latest analysis for Hutchison Port Holdings Trust

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

How Is Hutchison Port Holdings Trust's Growth Trending?

In order to justify its P/E ratio, Hutchison Port Holdings Trust would need to produce outstanding growth well in excess of the market.

Retrospectively, the last year delivered a frustrating 72% decrease to the company's bottom line. This means it has also seen a slide in earnings over the longer-term as EPS is down 5.8% in total over the last three years. Accordingly, shareholders would have felt downbeat about the medium-term rates of earnings growth.

Looking ahead now, EPS is anticipated to climb by 21% per annum during the coming three years according to the three analysts following the company. Meanwhile, the rest of the market is forecast to only expand by 5.5% per annum, which is noticeably less attractive.

In light of this, it's understandable that Hutchison Port Holdings Trust's P/E sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Bottom Line On Hutchison Port Holdings Trust's 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.

As we suspected, our examination of Hutchison Port Holdings Trust's analyst forecasts revealed that its superior earnings outlook is contributing to its high P/E. At this stage investors feel the potential for a deterioration in earnings isn't great enough to justify a lower P/E ratio. Unless these conditions change, they will continue to provide strong support to the share price.

Before you take the next step, you should know about the 5 warning signs for Hutchison Port Holdings Trust (2 are a bit concerning!) that we have uncovered.

You might be able to find a better investment than Hutchison Port Holdings Trust. 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.