WEBULL

Third Age Health Services Limited (NZSE:TAH) Stock's 31% Dive Might Signal An Opportunity But It Requires Some Scrutiny

Simply Wall St · 5d ago

The Third Age Health Services Limited (NZSE:TAH) share price has softened a substantial 31% over the previous 30 days, handing back much of the gains the stock has made lately. Looking at the bigger picture, even after this poor month the stock is up 98% in the last year.

Even after such a large drop in price, there still wouldn't be many who think Third Age Health Services' price-to-earnings (or "P/E") ratio of 18.6x is worth a mention when the median P/E in New Zealand is similar at about 19x. While this might not raise any eyebrows, if the P/E ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

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Third Age Health Services certainly has been doing a great job lately as it's been growing earnings at a really rapid pace. The P/E is probably moderate because investors think this strong earnings growth might not be enough to outperform the broader market in the near future. If that doesn't eventuate, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

Check out our latest analysis for Third Age Health Services

pe-multiple-vs-industry
NZSE:TAH Price to Earnings Ratio vs Industry January 5th 2026
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Third Age Health Services will help you shine a light on its historical performance.

Is There Some Growth For Third Age Health Services?

The only time you'd be comfortable seeing a P/E like Third Age Health Services' is when the company's growth is tracking the market closely.

If we review the last year of earnings growth, the company posted a terrific increase of 46%. The latest three year period has also seen an excellent 230% overall rise in EPS, aided by its short-term performance. So we can start by confirming that the company has done a great job of growing earnings over that time.

Weighing that recent medium-term earnings trajectory against the broader market's one-year forecast for expansion of 13% shows it's noticeably more attractive on an annualised basis.

In light of this, it's curious that Third Age Health Services' P/E sits in line with the majority of other companies. Apparently some shareholders believe the recent performance is at its limits and have been accepting lower selling prices.

The Key Takeaway

Third Age Health Services' plummeting stock price has brought its P/E right back to the rest of the market. Generally, our preference is to limit the use of the price-to-earnings ratio to establishing what the market thinks about the overall health of a company.

We've established that Third Age Health Services currently trades on a lower than expected P/E since its recent three-year growth is higher than the wider market forecast. There could be some unobserved threats to earnings preventing the P/E ratio from matching this positive performance. It appears some are indeed anticipating earnings instability, because the persistence of these recent medium-term conditions would normally provide a boost to the share price.

Before you take the next step, you should know about the 2 warning signs for Third Age Health Services that we have uncovered.

If these risks are making you reconsider your opinion on Third Age Health Services, explore our interactive list of high quality stocks to get an idea of what else is out there.