Yahoo Finance WillScot Mobile Mini Holdings Corp.'s (NASDAQ:WSC) P/E Still Appears To Be Reasonable
WillScot Mobile Mini Holdings Corp.'s (NASDAQ:WSC) price-to-earnings (or "P/E") ratio of 33.6x might make it look like a strong sell right now compared to the market in the United States, where around half of the companies have P/E ratios below 14x and even P/E's below 8x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/E.
Recent times have been advantageous for WillScot Mobile Mini Holdings as its earnings have been rising faster than most other companies. The P/E is probably high because investors think this strong earnings performance will continue. If not, then existing shareholders might be a little nervous about the viability of the share price.
View our latest analysis for WillScot Mobile Mini Holdings
If you'd like to see what analysts are forecasting going forward, you should check out our free report on WillScot Mobile Mini Holdings.
Does Growth Match The High P/E?
There's an inherent assumption that a company should far outperform the market for P/E ratios like WillScot Mobile Mini Holdings' to be considered reasonable.
If we review the last year of earnings growth, the company posted a terrific increase of 189%. However, the latest three year period hasn't been as great in aggregate as it didn't manage to provide any growth at all. Accordingly, shareholders probably wouldn't have been overly satisfied with the unstable medium-term growth rates.
Looking ahead now, EPS is anticipated to climb by 24% during the coming year according to the ten analysts following the company. With the market only predicted to deliver 8.2%, the company is positioned for a stronger earnings result.
With this information, we can see why WillScot Mobile Mini Holdings is trading at such a high P/E compared to the market. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.
The Final Word
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 WillScot Mobile Mini Holdings' 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. It's hard to see the share price falling strongly in the near future under these circumstances.
Before you take the next step, you should know about the 3 warning signs for WillScot Mobile Mini Holdings (1 is significant!) that we have uncovered.
If these risks are making you reconsider your opinion on WillScot Mobile Mini Holdings, 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.
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