WEBULL

Origin Energy Limited's (ASX:ORG) Business And Shares Still Trailing The Market

Simply Wall St · 1d ago

When close to half the companies in Australia have price-to-earnings ratios (or "P/E's") above 22x, you may consider Origin Energy Limited (ASX:ORG) as an attractive investment with its 13.1x P/E ratio. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's limited.

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Recent times haven't been advantageous for Origin Energy as its earnings have been rising slower than most other companies. The P/E is probably low because investors think this lacklustre earnings performance isn't going to get any better. If you still like the company, you'd be hoping earnings don't get any worse and that you could pick up some stock while it's out of favour.

Check out our latest analysis for Origin Energy

pe-multiple-vs-industry
ASX:ORG Price to Earnings Ratio vs Industry December 23rd 2025
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Origin Energy.

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

There's an inherent assumption that a company should underperform the market for P/E ratios like Origin Energy's to be considered reasonable.

Taking a look back first, we see that the company managed to grow earnings per share by a handy 6.3% last year. Although, the latest three year period in total hasn't been as good as it didn't manage to provide any growth at all. So it appears to us that the company has had a mixed result in terms of growing earnings over that time.

Turning to the outlook, the next three years should bring diminished returns, with earnings decreasing 8.5% per year as estimated by the ten analysts watching the company. Meanwhile, the broader market is forecast to expand by 17% per year, which paints a poor picture.

With this information, we are not surprised that Origin Energy is trading at a P/E lower than the market. Nonetheless, there's no guarantee the P/E has reached a floor yet with earnings going in reverse. Even just maintaining these prices could be difficult to achieve as the weak outlook is weighing down the shares.

What We Can Learn From Origin Energy's P/E?

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.

We've established that Origin Energy maintains its low P/E on the weakness of its forecast for sliding earnings, as expected. 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.

Don't forget that there may be other risks. For instance, we've identified 2 warning signs for Origin Energy (1 is potentially serious) you should be aware of.

You might be able to find a better investment than Origin Energy. If you want a selection of possible candidates, check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).