Yahoo Finance Earnings Working Against F&G Annuities & Life, Inc.'s (NYSE:FG) Share Price
With a price-to-earnings (or "P/E") ratio of 3.6x F&G Annuities & Life, Inc. (NYSE:FG) may be sending very bullish signals at the moment, given that almost half of all companies in the United States have P/E ratios greater than 16x and even P/E's higher than 30x are not unusual. However, the P/E might be quite low for a reason and it requires further investigation to determine if it's justified.
F&G Annuities & Life could be doing better as its earnings have been going backwards lately while most other companies have been seeing positive earnings growth. It seems that many are expecting the dour earnings performance to persist, which has repressed the P/E. If you still like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.
See our latest analysis for F&G Annuities & Life
Want the full picture on analyst estimates for the company? Then our free report on F&G Annuities & Life will help you uncover what's on the horizon.
How Is F&G Annuities & Life's Growth Trending?
F&G Annuities & Life's P/E ratio would be typical for a company that's expected to deliver very poor growth or even falling earnings, and importantly, perform much worse than the market.
If we review the last year of earnings, dishearteningly the company's profits fell to the tune of 5.6%. However, a few very strong years before that means that it was still able to grow EPS by an impressive 1,092% in total over the last three years. Although it's been a bumpy ride, it's still fair to say the earnings growth recently has been more than adequate for the company.
Looking ahead now, EPS is anticipated to slump, contracting by 42% during the coming year according to the twin analysts following the company. That's not great when the rest of the market is expected to grow by 6.4%.
With this information, we are not surprised that F&G Annuities & Life is trading at a P/E lower than the market. Nonetheless, there's no guarantee the P/E has reached a floor yet with earnings going in reverse. There's potential for the P/E to fall to even lower levels if the company doesn't improve its profitability.
What We Can Learn From F&G Annuities & Life's P/E?
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.
As we suspected, our examination of F&G Annuities & Life's analyst forecasts revealed that its outlook for shrinking earnings is contributing to its low P/E. At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.
And what about other risks? Every company has them, and we've spotted 3 warning signs for F&G Annuities & Life (of which 2 are a bit unpleasant!) you should know about.
If these risks are making you reconsider your opinion on F&G Annuities & Life, 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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