NASDAQ:ZYXI) may be sending very bearish signals at the moment, given that almost half of all companies in the United States have P/E ratios under 18x and even P/E’s lower than 9x are not unusual. However, the P/E might be quite high for a reason and it requires further investigation to determine if it’s justified.” data-reactid=”28″>With a price-to-earnings (or “P/E”) ratio of 54.2x Zynex, Inc. (NASDAQ:ZYXI) may be sending very bearish signals at the moment, given that almost half of all companies in the United States have P/E ratios under 18x and even P/E’s lower than 9x are not unusual. However, the P/E might be quite high for a reason and it requires further investigation to determine if it’s justified.
Recent times have been pleasing for Zynex as its earnings have risen in spite of the market’s earnings going into reverse. It seems that many are expecting the company to continue defying the broader market adversity, which has increased investors’ willingness to pay up for the stock. If not, then existing shareholders might be a little nervous about the viability of the share price.
Check out our latest analysis for Zynex ” data-reactid=”30″>Check out our latest analysis for Zynex
free report on Zynex.” data-reactid=”47″>If you’d like to see what analysts are forecasting going forward, you should check out our free report on Zynex.
How Is Zynex’s Growth Trending?
Zynex’s P/E ratio would be typical for a company that’s expected to deliver very strong growth, and importantly, perform much better than the market.
Retrospectively, the last year delivered a decent 11% gain to the company’s bottom line. The latest three year period has also seen an excellent 304% overall rise in EPS, aided somewhat by its short-term performance. Accordingly, shareholders would have probably welcomed those medium-term rates of earnings growth.
Looking ahead now, EPS is anticipated to climb by 36% per year during the coming three years according to the five analysts following the company. That’s shaping up to be materially higher than the 12% each year growth forecast for the broader market.
In light of this, it’s understandable that Zynex’s P/E sits above the majority of other companies. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.
The Key Takeaway
Generally, our preference is to limit the use of the price-to-earnings ratio to establishing what the market thinks about the overall health of a company.
As we suspected, our examination of Zynex’s analyst forecasts revealed that its superior earnings outlook is contributing to its high P/E. Right now shareholders are comfortable with the P/E as they are quite confident future earnings aren’t under threat. Unless these conditions change, they will continue to provide strong support to the share price.
5 warning signs for Zynex (of which 1 makes us a bit uncomfortable!) you should know about.” data-reactid=”56″>And what about other risks? Every company has them, and we’ve spotted 5 warning signs for Zynex (of which 1 makes us a bit uncomfortable!) you should know about.
our interactive list of high quality stocks to get an idea of what else is out there.” data-reactid=”57″>If these risks are making you reconsider your opinion on Zynex, explore our interactive list of high quality stocks to get an idea of what else is out there.
Get in touch with us directly. Alternatively, email [email protected].” data-reactid=”58″>This article by Simply Wall St is general in nature. 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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