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Emirates Integrated Telecommunications Company PJSC's (DFM:DU) Share Price Could Signal Some Risk

Simply Wall St · 07/03 03:34

When close to half the companies in the United Arab Emirates have price-to-earnings ratios (or "P/E's") below 12x, you may consider Emirates Integrated Telecommunications Company PJSC (DFM:DU) as a stock to potentially avoid with its 17.2x P/E ratio. However, the P/E might be high for a reason and it requires further investigation to determine if it's justified.

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With earnings growth that's superior to most other companies of late, Emirates Integrated Telecommunications Company PJSC has been doing relatively well. It seems that many are expecting the strong earnings performance to persist, which has raised the P/E. If not, then existing shareholders might be a little nervous about the viability of the share price.

View our latest analysis for Emirates Integrated Telecommunications Company PJSC

pe-multiple-vs-industry
DFM:DU Price to Earnings Ratio vs Industry July 3rd 2025
Keen to find out how analysts think Emirates Integrated Telecommunications Company PJSC's future stacks up against the industry? In that case, our free report is a great place to start.

How Is Emirates Integrated Telecommunications Company PJSC's Growth Trending?

Emirates Integrated Telecommunications Company PJSC's P/E ratio would be typical for a company that's expected to deliver solid growth, and importantly, perform better than the market.

Taking a look back first, we see that the company grew earnings per share by an impressive 37% last year. Pleasingly, EPS has also lifted 126% in aggregate from three years ago, 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 three years should generate growth of 4.0% per year as estimated by the six analysts watching the company. That's shaping up to be materially lower than the 9.2% each year growth forecast for the broader market.

With this information, we find it concerning that Emirates Integrated Telecommunications Company PJSC is trading at a P/E higher than the market. Apparently many investors in the company are way more bullish than analysts indicate and aren't willing to let go of their stock at any price. Only the boldest would assume these prices are sustainable as this level of earnings growth is likely to weigh heavily on the share price eventually.

The Key Takeaway

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.

Our examination of Emirates Integrated Telecommunications Company PJSC's analyst forecasts revealed that its inferior earnings outlook isn't impacting its high P/E anywhere near as much as we would have predicted. When we see a weak earnings outlook with slower than market growth, we suspect the share price is at risk of declining, sending the high P/E lower. This places shareholders' investments at significant risk and potential investors in danger of paying an excessive premium.

And what about other risks? Every company has them, and we've spotted 1 warning sign for Emirates Integrated Telecommunications Company PJSC you should know about.

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