Why We’re Not Concerned About Localiza Rent a Car S.A.’s (BVMF:RENT3) Share Price
Localiza Rent a Car S.A.’s (BVMF:RENT3) price-to-earnings (or “P/E”) ratio of 20.1x might make it look like a strong sell right now compared to the market in Brazil, where around half of the companies have P/E ratios below 8x and even P/E’s below 6x 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.
While the market has experienced earnings growth lately, Localiza Rent a Car’s earnings have gone into reverse gear, which is not great. One possibility is that the P/E is high because investors think this poor earnings…
