New Hope Corporation Limited's (ASX:NHC) Earnings Are Not Doing Enough For Some Investors

Simply Wall St.01-13

With a price-to-earnings (or "P/E") ratio of 8x New Hope Corporation Limited (ASX:NHC) may be sending very bullish signals at the moment, given that almost half of all companies in Australia have P/E ...

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Although, it's not wise to just take the P/E at face value as there may be an explanation why it's so limited.    We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.  New Hope hasn't been tracking well recently as its declining earnings compare poorly to other companies, which have seen some growth on average.   It seems that many are expecting the dour earnings performance to persist, which has repressed the P/E.  If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.     Check out our latest analysis for New Hope ASX:NHC Price to Earnings Ratio vs Industry January 12th 2026 If you'd like to see what analysts are forecasting going forward, you should check out our free report on New Hope. Advertisement Is There Any Growth For New Hope?   The only time you'd be truly comfortable seeing a P/E as depressed as New Hope's is when the company's growth is on track to lag the market decidedly.   If we review the last year of earnings, dishearteningly the company's profits fell to the tune of 7.6%.   This means it has also seen a slide in earnings over the longer-term as EPS is down 56% in total over the last three years.  Therefore, it's fair to say the earnings growth recently has been undesirable for the company.     Turning to the outlook, the next three years should bring diminished returns, with earnings decreasing 5.9%  each year as estimated by the seven analysts watching the company.  Meanwhile, the broader market is forecast to expand by 17% per annum, which paints a poor picture.  With this information, we are not surprised that New Hope is trading at a P/E lower than the market.  However, shrinking earnings are unlikely to lead to a stable P/E over the longer term.  Even just maintaining these prices could be difficult to achieve as the weak outlook is weighing down the shares.    The Final Word  It's argued the price-to-earnings ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.  We've established that New Hope maintains its low P/E on the weakness of its forecast for sliding earnings, as expected.  At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio.  It's hard to see the share price rising strongly in the near future under these circumstances.     There are also other vital risk factors to consider before investing and we've discovered 2 warning signs for New Hope that you should be aware of.   If you're unsure about the strength of New Hope's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed. Valuation is complex, but we're here to simplify it.Discover if New Hope might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.Access Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"tenantId":"TBGLOBAL","deviceId":"web-server-community-laohu8-v3","version":"4.36.2","shortVersion":"4.36.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2603783125","isCrawlerRequest":true}