MOL Magyar Olaj- és Gázipari Nyilvánosan Muködo Részvénytársaság's (BUSE:MOL) Share Price Is Matching Sentiment Around Its Earnings

Simply Wall St · 07/05 07:53

MOL Magyar Olaj- és Gázipari Nyilvánosan Muködo Részvénytársaság's (BUSE:MOL) price-to-earnings (or "P/E") ratio of 4.5x might make it look like a strong buy right now compared to the market in Hungary, where around half of the companies have P/E ratios above 11x and even P/E's above 16x 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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With earnings that are retreating more than the market's of late, MOL Magyar Olaj- és Gázipari Nyilvánosan Muködo Részvénytársaság has been very sluggish. It seems that many are expecting the dismal earnings performance to persist, which has repressed the P/E. You'd much rather the company wasn't bleeding earnings if you still believe in the business. If not, then existing shareholders will probably struggle to get excited about the future direction of the share price.

Check out our latest analysis for MOL Magyar Olaj- és Gázipari Nyilvánosan Muködo Részvénytársaság

pe-multiple-vs-industry
BUSE:MOL Price to Earnings Ratio vs Industry July 5th 2025
If you'd like to see what analysts are forecasting going forward, you should check out our free report on MOL Magyar Olaj- és Gázipari Nyilvánosan Muködo Részvénytársaság.

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

The only time you'd be truly comfortable seeing a P/E as depressed as MOL Magyar Olaj- és Gázipari Nyilvánosan Muködo Részvénytársaság's is when the company's growth is on track to lag the market decidedly.

Retrospectively, the last year delivered a frustrating 8.2% decrease to the company's bottom line. As a result, earnings from three years ago have also fallen 9.1% overall. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.

Shifting to the future, estimates from the six analysts covering the company suggest earnings growth is heading into negative territory, declining 9.7% per year over the next three years. That's not great when the rest of the market is expected to grow by 15% per annum.

In light of this, it's understandable that MOL Magyar Olaj- és Gázipari Nyilvánosan Muködo Részvénytársaság's P/E would sit below the majority of other companies. 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.

The Final Word

Using the price-to-earnings ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

As we suspected, our examination of MOL Magyar Olaj- és Gázipari Nyilvánosan Muködo Részvénytársaság's analyst forecasts revealed that its outlook for shrinking earnings 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.

And what about other risks? Every company has them, and we've spotted 2 warning signs for MOL Magyar Olaj- és Gázipari Nyilvánosan Muködo Részvénytársaság (of which 1 is potentially serious!) you should know about.

Of course, you might also be able to find a better stock than MOL Magyar Olaj- és Gázipari Nyilvánosan Muködo Részvénytársaság. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.