Computershare Limited’s (ASX:CPU) Share Price Could Signal Some Risk
Computershare Limited’s (ASX:CPU) price-to-earnings (or “P/E”) ratio of 27.4x might make it look like a strong sell right now compared to the market in Australia, where around half of the companies have P/E ratios below 18x and even P/E’s below 10x are quite common. However, the P/E might be quite high for a reason and it requires further investigation to determine if it’s justified.
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Computershare certainly has been doing a good job lately as it’s been growing earnings more than most other companies. The P/E is probably high because investors think this strong earnings performance will continue. If not, then existing shareholders might be a little nervous…
