Francotyp-Postalia Holding AG (ETR:FPH) Surges 25% Yet Its Low P/E Is No Reason For Excitement

Simply Wall St · 06/10 04:13

The Francotyp-Postalia Holding AG (ETR:FPH) share price has done very well over the last month, posting an excellent gain of 25%. Unfortunately, despite the strong performance over the last month, the full year gain of 7.7% isn't as attractive.

Although its price has surged higher, Francotyp-Postalia Holding's price-to-earnings (or "P/E") ratio of 4x might still make it look like a strong buy right now compared to the market in Germany, where around half of the companies have P/E ratios above 20x and even P/E's above 39x 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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Recent times have been advantageous for Francotyp-Postalia Holding as its earnings have been rising faster than most other companies. It might be that many expect the strong earnings performance to degrade substantially, which has repressed the P/E. If you 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.

View our latest analysis for Francotyp-Postalia Holding

pe-multiple-vs-industry
XTRA:FPH Price to Earnings Ratio vs Industry June 10th 2025
Want the full picture on analyst estimates for the company? Then our free report on Francotyp-Postalia Holding will help you uncover what's on the horizon.

Is There Any Growth For Francotyp-Postalia Holding?

In order to justify its P/E ratio, Francotyp-Postalia Holding would need to produce anemic growth that's substantially trailing the market.

If we review the last year of earnings growth, the company posted a worthy increase of 11%. Pleasingly, EPS has also lifted 139% in aggregate from three years ago, partly thanks to the last 12 months of growth. Accordingly, shareholders would have probably welcomed those medium-term rates of earnings growth.

Turning to the outlook, the next year should bring diminished returns, with earnings decreasing 44% as estimated by the only analyst watching the company. With the market predicted to deliver 22% growth , that's a disappointing outcome.

With this information, we are not surprised that Francotyp-Postalia Holding is trading at a P/E lower than the market. However, shrinking earnings are unlikely to lead to a stable P/E over the longer term. Even just maintaining these prices could be difficult to achieve as the weak outlook is weighing down the shares.

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The Bottom Line On Francotyp-Postalia Holding's P/E

Even after such a strong price move, Francotyp-Postalia Holding's P/E still trails the rest of the market significantly. 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.

We've established that Francotyp-Postalia Holding maintains its low P/E on the weakness of its forecast for sliding earnings, as expected. Right now shareholders are accepting the low P/E as they concede future earnings probably won't provide any pleasant surprises. It's hard to see the share price rising strongly in the near future under these circumstances.

Before you settle on your opinion, we've discovered 2 warning signs for Francotyp-Postalia Holding (1 makes us a bit uncomfortable!) that you should be aware of.

It's important to make sure you look for a great company, not just the first idea you come across. So take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).