Subdued Growth No Barrier To Seanergy Maritime Holdings Corp. (NASDAQ:SHIP) With Shares Advancing 27%

Despite an already strong run, Seanergy Maritime Holdings Corp. (NASDAQ:SHIP) shares have been powering on, with a gain of 27% in the last thirty days. The last month tops off a massive increase of 178% in the last year.

Even after such a large jump in price, you could still be forgiven for feeling indifferent about Seanergy Maritime Holdings' P/E ratio of 15.7x, since the median price-to-earnings (or "P/E") ratio in the United States is also close to 17x. While this might not raise any eyebrows, if the P/E ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

Recent times have been pleasing for Seanergy Maritime Holdings as its earnings have risen in spite of the market's earnings going into reverse. It might be that many expect the strong earnings performance to deteriorate like the rest, which has kept the P/E from rising. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

See our latest analysis for Seanergy Maritime Holdings

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

How Is Seanergy Maritime Holdings' Growth Trending?

Seanergy Maritime Holdings' P/E ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the market.

Taking a look back first, we see that the company grew earnings per share by an impressive 67% last year. Still, EPS has barely risen at all from three years ago in total, which is not ideal. So it appears to us that the company has had a mixed result in terms of growing earnings over that time.

Turning to the outlook, the next three years should bring diminished returns, with earnings decreasing 40% per year as estimated by the four analysts watching the company. Meanwhile, the broader market is forecast to expand by 9.9% each year, which paints a poor picture.

With this information, we find it concerning that Seanergy Maritime Holdings is trading at a fairly similar P/E to the market. Apparently many investors in the company reject the analyst cohort's pessimism and aren't willing to let go of their stock right now. There's a good chance these shareholders are setting themselves up for future disappointment if the P/E falls to levels more in line with the negative growth outlook.

The Key Takeaway

Its shares have lifted substantially and now Seanergy Maritime Holdings' P/E is also back up to the market median. 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.

We've established that Seanergy Maritime Holdings currently trades on a higher than expected P/E for a company whose earnings are forecast to decline. Right now we are uncomfortable with the P/E as the predicted future earnings are unlikely to support a more positive sentiment for long. Unless these conditions improve, it's challenging to accept these prices as being reasonable.

It is also worth noting that we have found 4 warning signs for Seanergy Maritime Holdings (2 don't sit too well with us!) that you need to take into consideration.

You might be able to find a better investment than Seanergy Maritime Holdings. 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.