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Little Excitement Around Boliden AB (publ)'s (STO:BOL) Earnings As Shares Take 27% Pounding

Simply Wall St · 04/10/2025 04:19

Boliden AB (publ) (STO:BOL) shareholders won't be pleased to see that the share price has had a very rough month, dropping 27% and undoing the prior period's positive performance. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 21% in that time.

Even after such a large drop in price, Boliden's price-to-earnings (or "P/E") ratio of 7.3x might still make it look like a strong buy right now compared to the market in Sweden, where around half of the companies have P/E ratios above 20x and even P/E's above 35x are quite common. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's so limited.

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Boliden certainly has been doing a good job lately as it's been growing earnings more than most other companies. One possibility is that the P/E is low because investors think this strong earnings performance might be less impressive moving forward. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.

View our latest analysis for Boliden

pe-multiple-vs-industry
OM:BOL Price to Earnings Ratio vs Industry April 10th 2025
Want the full picture on analyst estimates for the company? Then our free report on Boliden will help you uncover what's on the horizon.

What Are Growth Metrics Telling Us About The Low P/E?

Boliden'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.

Taking a look back first, we see that the company grew earnings per share by an impressive 65% last year. The latest three year period has also seen a 15% overall rise in EPS, aided extensively by its short-term performance. Therefore, it's fair to say the earnings growth recently has been respectable for the company.

Looking ahead now, EPS is anticipated to climb by 5.7% each year during the coming three years according to the analysts following the company. With the market predicted to deliver 20% growth each year, the company is positioned for a weaker earnings result.

With this information, we can see why Boliden is trading at a P/E lower than the market. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

What We Can Learn From Boliden's P/E?

Shares in Boliden have plummeted and its P/E is now low enough to touch the ground. 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 Boliden's analyst forecasts revealed that its inferior earnings outlook 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.

Before you take the next step, you should know about the 1 warning sign for Boliden that we have uncovered.

Of course, you might also be able to find a better stock than Boliden. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.