Positive Sentiment Still Eludes Jaguar Health, Inc. (NASDAQ:JAGX) Following 32% Share Price Slump

To the annoyance of some shareholders, Jaguar Health, Inc. (NASDAQ:JAGX) shares are down a considerable 32% in the last month, which continues a horrid run for the company. For any long-term shareholders, the last month ends a year to forget by locking in a 97% share price decline.

Following the heavy fall in price, given about half the companies in the United States have price-to-earnings ratios (or "P/E's") above 16x, you may consider Jaguar Health as a highly attractive investment with its -0.3x 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.

Jaguar Health certainly has been doing a good job lately as it's been growing earnings more than most other companies. One possibility is that the P/E is low because investors think this strong earnings performance might be less impressive moving forward. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.

Check out our latest analysis for Jaguar Health

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

What Are Growth Metrics Telling Us About The Low P/E?

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

Retrospectively, the last year delivered an exceptional 97% gain to the company's bottom line. However, the latest three year period hasn't been as great in aggregate as it didn't manage to provide any growth at all. Therefore, it's fair to say that earnings growth has been inconsistent recently for the company.

Turning to the outlook, the next three years should generate growth of 19% per year as estimated by the lone analyst watching the company. That's shaping up to be materially higher than the 11% per year growth forecast for the broader market.

In light of this, it's peculiar that Jaguar Health's P/E sits below the majority of other companies. It looks like most investors are not convinced at all that the company can achieve future growth expectations.

The Bottom Line On Jaguar Health's P/E

Jaguar Health's P/E looks about as weak as its stock price lately. Using the price-to-earnings ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

We've established that Jaguar Health currently trades on a much lower than expected P/E since its forecast growth is higher than the wider market. When we see a strong earnings outlook with faster-than-market growth, we assume potential risks are what might be placing significant pressure on the P/E ratio. It appears many are indeed anticipating earnings instability, because these conditions should normally provide a boost to the share price.

It's always necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with Jaguar Health (at least 2 which don't sit too well with us), and understanding these should be part of your investment process.

If these risks are making you reconsider your opinion on Jaguar Health, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.