Earnings Tell The Story For Compañía de Minas Buenaventura S.A.A. (NYSE:BVN)

When close to half the companies in the United States have price-to-earnings ratios (or "P/E's") below 18x, you may consider Compañía de Minas Buenaventura S.A.A. (NYSE:BVN) as a stock to avoid entirely with its 33.5x P/E ratio. However, the P/E might be quite high for a reason and it requires further investigation to determine if it's justified.

With its earnings growth in positive territory compared to the declining earnings of most other companies, Compañía de Minas BuenaventuraA has been doing quite well of late. The P/E is probably high because investors think the company will continue to navigate the broader market headwinds better than most. If not, then existing shareholders might be a little nervous about the viability of the share price.

View our latest analysis for Compañía de Minas BuenaventuraA

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Compañía de Minas BuenaventuraA.

Is There Enough Growth For Compañía de Minas BuenaventuraA?

In order to justify its P/E ratio, Compañía de Minas BuenaventuraA would need to produce outstanding growth well in excess of the market.

Retrospectively, the last year delivered a decent 10.0% gain to the company's bottom line. This was backed up an excellent period prior to see EPS up by 65% in total over the last three years. So we can start by confirming that the company has done a great job of growing earnings over that time.

Shifting to the future, estimates from the four analysts covering the company suggest earnings should grow by 48% per year over the next three years. That's shaping up to be materially higher than the 10% each year growth forecast for the broader market.

In light of this, it's understandable that Compañía de Minas BuenaventuraA'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 Compañía de Minas BuenaventuraA'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 Compañía de Minas BuenaventuraA'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.

There are also other vital risk factors to consider before investing and we've discovered 1 warning sign for Compañía de Minas BuenaventuraA that you should be aware of.

Of course, you might also be able to find a better stock than Compañía de Minas BuenaventuraA. 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.