WEBULL

SGS SA's (VTX:SGSN) Popularity With Investors Is Under Threat From Overpricing

Simply Wall St · 6d ago

With a price-to-earnings (or "P/E") ratio of 28.7x SGS SA (VTX:SGSN) may be sending bearish signals at the moment, given that almost half of all companies in Switzerland have P/E ratios under 20x and even P/E's lower than 15x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the elevated P/E.

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Recent times have been advantageous for SGS as its earnings have been rising faster than most other companies. It seems that many are expecting the strong earnings performance to persist, which has raised the P/E. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

Check out our latest analysis for SGS

pe-multiple-vs-industry
SWX:SGSN Price to Earnings Ratio vs Industry January 6th 2026
If you'd like to see what analysts are forecasting going forward, you should check out our free report on SGS.

How Is SGS' Growth Trending?

The only time you'd be truly comfortable seeing a P/E as high as SGS' is when the company's growth is on track to outshine the market.

Retrospectively, the last year delivered a decent 11% gain to the company's bottom line. Ultimately though, it couldn't turn around the poor performance of the prior period, with EPS shrinking 1.5% in total over the last three years. Accordingly, shareholders would have felt downbeat about the medium-term rates of earnings growth.

Looking ahead now, EPS is anticipated to climb by 9.7% per annum during the coming three years according to the analysts following the company. With the market predicted to deliver 11% growth per annum, the company is positioned for a comparable earnings result.

With this information, we find it interesting that SGS is trading at a high P/E compared to the market. It seems most investors are ignoring the fairly average growth expectations and are willing to pay up for exposure to the stock. Although, additional gains will be difficult to achieve as this level of earnings growth is likely to weigh down the share price eventually.

What We Can Learn From SGS' P/E?

Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

Our examination of SGS' analyst forecasts revealed that its market-matching earnings outlook isn't impacting its high P/E as much as we would have predicted. Right now we are uncomfortable with the relatively high share price as the predicted future earnings aren't likely to support such positive sentiment for long. Unless these conditions improve, it's challenging to accept these prices as being reasonable.

You should always think about risks. Case in point, we've spotted 2 warning signs for SGS you should be aware of.

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