Perma-Pipe International Holdings, Inc. (NASDAQ:PPIH) shareholders have had their patience rewarded with a 28% share price jump in the last month. The last 30 days bring the annual gain to a very sharp 86%.
Although its price has surged higher, given about half the companies in the United States have price-to-earnings ratios (or “P/E’s”) above 18x, you may still consider Perma-Pipe International Holdings as an attractive investment with its 11.1x 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.
As an illustration, earnings have deteriorated at Perma-Pipe International Holdings over the last year, which is not ideal at all. It might be that many expect the disappointing earnings performance to continue or accelerate, which has repressed the P/E. However, if this doesn’t eventuate then existing shareholders may be feeling optimistic about the future direction of the share price.
View our latest analysis for Perma-Pipe International Holdings
NasdaqGM:PPIH Price to Earnings Ratio vs Industry June 15th 2025 Although there are no analyst estimates available for Perma-Pipe International Holdings, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow. Does Growth Match The Low P/E?
In order to justify its P/E ratio, Perma-Pipe International Holdings would need to produce sluggish growth that’s trailing the market.
If we review the last year of earnings, dishearteningly the company’s profits fell to the tune of 4.5%. However, a few very strong years before that means that it was still able to grow EPS by an impressive 109% in total over the last three years. So we can start by confirming that the company has generally done a very good job of growing earnings over that time, even though it had some hiccups along the way.
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 peculiar that Perma-Pipe International Holdings’ P/E sits below the majority of other companies. It looks like most investors are not convinced the company can maintain its recent growth rates.
The Key Takeaway
Perma-Pipe International Holdings’ stock might have been given a solid boost, but its P/E certainly hasn’t reached any great heights. While the price-to-earnings ratio shouldn’t be the defining factor in whether you buy a stock or not, it’s quite a capable barometer of earnings expectations.
We’ve established that Perma-Pipe International Holdings currently trades on a much lower than expected P/E since its recent three-year growth is higher than the wider market forecast. There could be some major unobserved threats to earnings preventing the P/E ratio from matching this positive performance. At least price risks look to be very low if recent medium-term earnings trends continue, but investors seem to think future earnings could see a lot of volatility.
We don’t want to rain on the parade too much, but we did also find 1 warning sign for Perma-Pipe International Holdings that you need to be mindful of.
Of course, you might find a fantastic investment by looking at a few good candidates. So take a peek at this free list of companies with a strong growth track record, trading on a low P/E.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.