There is little excitement around Hutchison Port Holdings Trust (SGX:NS8U), Earnings

Hutchison Port Holdings Trust (SGX:NS8UA price-to earnings (or “P/E”) ratio that is 7.8x may make it seem like a buy. However, this compares to Singapore where nearly half of all companies have P/Es greater than 11x. Even higher P/Es are common in Singapore. We’d have to dig deeper to see if there is any rational basis for the lower P/E.

Hutchison Port Holdings Trust has enjoyed a favorable economic environment in recent years, with its earnings rising at a faster rate than other companies. The P/E could be low because investors believe this strong earnings performance may not be as impressive in the future. If so, existing shareholders can be very optimistic about the future direction for the share price.

Check out our latest analysis for Hutchison Port Holdings Trust

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Is there any growth for the Hutchison Port Holdings Trust Trust

You would only be comfortable with a Hutchison Port Holdings Trust P/E of less than 5% if the company’s growth is below the market.

In retrospect, the company saw a remarkable 22% increase in its bottom line. EPS is still below its three-year average, which is a problem. Therefore, earnings growth has been inconsistent for the company in recent months.

Looking at the future, earnings are expected to decrease 8.9% annually over the next three year, as predicted by three analysts. The market overall is expected to grow by 1.9% per year, which is a very poor picture.

We are not surprised to see that Hutchison Port Holdings Trust trades at a lower P/E than the market. But, declining earnings will not lead to a stable PE over the long term. The weak outlook means that it could be hard to maintain these prices.

The Key Takeaway

Although it is often argued that the price-to earnings ratio is a poor indicator of business sentiment, it can still be an important measure of industry value.

We have confirmed that Hutchison Port Holdings Trust continues to maintain its low P/E due to its weak forecast for sliding earnings. As they know that future earnings won’t bring any pleasant surprises, shareholders are settling for the low P/E. These conditions will continue to be a barrier to the share price at these levels unless they improve.

It is always important to be aware of the ever-present risk of investing. We’ve identified 2 warning signs with Hutchison Port Holdings Trust Understanding them is an important part of any investment process.

If you are looking for a way to make your life easier, Uncertain about the strength and viability of Hutchison Port Holdings Trust?Why not explore? our interactive list of stocks with solid business fundamentals You may also be interested in other companies.

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This article by Simply Wall St has a general nature. Our commentary is based on historical data, analyst forecasts and other unbiased information. We do not intend to provide financial advice. It is not a recommendation not to buy or sell any stocks and does not consider your financial situation or objectives. Our goal is to provide you with long-term, focused analysis based on fundamental data. Our analysis may not take into account the most recent price-sensitive company announcements and qualitative material. Simply Wall St holds no position in any of the stocks mentioned.

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