AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
_04_08_2025_03_58_16_139987.jpg)
Highlights
- Suncorp Group Limited is trading with a P/E ratio of 14.8x.
- Analysts estimate a decline in earnings over the next three years.
- Current P/E might not align with negative growth expectations.
For investors examining Suncorp Group Limited (ASX:SUN), the current price-to-earnings (P/E) ratio of 14.8x might seem notable. Considering Australia's median P/E ratio stands similarly at about 17x, Suncorp's figures initially appear unremarkable. However, a deeper look into the company's growth projections reveals a story that investors should heed.
Suncorp Group has recently posted impressive growth, with a notable 122% increase in last year's earnings and a 42% rise in earnings per share (EPS) over three years. This robust performance could suggest reasons for optimism among current shareholders. Nonetheless, projections indicate a shift in the company's earnings trajectory.
Forecasts from analysts covering the company suggest a concerning decline, with earnings expected to dip at an average rate of 0.9% annually over the next three years. In contrast, the broader market is anticipated to grow by 15% each year. Given this outlook, Suncorp Group's similar P/E ratio to the market raises eyebrows.
Investors appear hopeful for a turnaround in Suncorp's business prospects, but the analyst consensus doesn't share this optimism. Without improvements in the underlying conditions, the P/E ratio might not sustain its current level, leading to potential disappointments.
The P/E ratio is a useful metric, relying solely on it may not paint the full picture of future prospects. Suncorp Group is trading at a higher than expected P/E given the anticipated decline in earnings. Until there is evidence of improvement, it's challenging to justify the current price as reasonable. Moreover, investors should be cautious and keep an eye on potential warning signs that could impact future performance.
