Do You Like OM Holdings Limited (ASX:OMH) At This P/E Ratio? OM...

Do You Like OM Holdings Limited (ASX:OMH) At This P/E Ratio?

OM Holdings Limited’s (ASX:OMH) P/E ratio and reflect on what it tells us about the company’s share price. OM Holdings has a P/E ratio of 4.99, based on the last twelve months. That corresponds to an earnings yield of approximately 20%.

Price to Earnings Ratio = Price per Share ÷ Earnings per Share (EPS)
Or for OM Holdings:
P/E of 4.99 = A$1.34 ÷ A$0.27 (Based on the trailing twelve months to June 2018.)

OM Holdings increased earnings per share by a whopping 274% last year. And it has bolstered its earnings per share by 48% per year over the last five years. With that performance, I would expect it to have an above average P/E ratio.
OM Holdings’s P/E tells us that market participants think it will not fare as well as its peers in the same industry. Since the market seems unimpressed with OM Holdings, it’s quite possible it could surprise on the upside.
OM Holdings’s P/E is 5 which is below average (15) in the AU market. The EPS growth last year was strong, and debt levels are quite reasonable. If the company can continue to grow earnings, then the current P/E may be unjustifiably low.
When the market is wrong about a stock, it gives savvy investors an opportunity.