Take Care Before Jumping Onto MARA Holdings, Inc. (NASDAQ:MARA) Even Though It's 29% Cheaper

To the annoyance of some shareholders, MARA Holdings, Inc. (NASDAQ:MARA) shares are down a considerable 29% in the last month, which continues a horrid run for the company. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 38% share price drop.

Although its price has dipped substantially, MARA Holdings' price-to-earnings (or "P/E") ratio of 7.7x might still make it look like a strong buy right now compared to the market in the United States, where around half of the companies have P/E ratios above 18x and even P/E's above 32x are quite common. However, the P/E might be quite low for a reason and it requires further investigation to determine if it's justified.

Recent times have been advantageous for MARA Holdings as its earnings have been rising faster than most other companies. It might be that many expect the strong earnings performance to degrade substantially, which has repressed the P/E. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.

See our latest analysis for MARA Holdings

Want the full picture on analyst estimates for the company? Then our free report on MARA Holdings will help you uncover what's on the horizon.

Is There Any Growth For MARA Holdings?

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

If we review the last year of earnings growth, the company posted a terrific increase of 32%. Still, EPS has barely risen at all from three years ago in total, which is not ideal. Accordingly, shareholders probably wouldn't have been overly satisfied with the unstable medium-term growth rates.

What We Can Learn From MARA Holdings' P/E?

MARA Holdings' P/E looks about as weak as its stock price lately. We'd say the price-to-earnings ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

You should always think about risks. Case in point, we've spotted 5 warning signs for MARA Holdings you should be aware of, and 3 of them are concerning.

Of course, you might also be able to find a better stock than MARA Holdings. 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.