With Sigma Healthcare Limited (ASX:SIG) It Looks Like You'll Get What You Pay For

Simply Wall St.01-17

Sigma Healthcare Limited's (ASX:SIG) price-to-earnings (or "P/E") ratio of 62.9x might make it look like a strong sell right now compared to the market in Australia, where around half of the companies...

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However, the P/E might be quite high for a reason and it requires further investigation to determine if it's justified.    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.  Sigma Healthcare could be doing better as its earnings have been going backwards lately while most other companies have been seeing positive earnings growth.   It might be that many expect the dour earnings performance to recover substantially, which has kept the P/E from collapsing.  You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.     Check out our latest analysis for Sigma Healthcare ASX:SIG Price to Earnings Ratio vs Industry January 17th 2026 Keen to find out how analysts think Sigma Healthcare's future stacks up against the industry? In that case, our free report is a great place to start. Advertisement Is There Enough Growth For Sigma Healthcare?   In order to justify its P/E ratio, Sigma Healthcare would need to produce outstanding growth well in excess of the market.   Taking a look back first, the company's earnings per share growth last year wasn't something to get excited about as it posted a disappointing decline of 8.1%.   As a result, earnings from three years ago have also fallen 81% overall.  So unfortunately, we have to acknowledge that the company has not done a great job of growing earnings over that time.     Looking ahead now, EPS is anticipated to climb by 21% each year during the coming three years according to the eleven analysts following the company.  With the market only predicted to deliver 17% per annum, the company is positioned for a stronger earnings result.  In light of this, it's understandable that Sigma Healthcare's P/E sits above the majority of other companies.  Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.    What We Can Learn From Sigma Healthcare's P/E?  Generally, our preference is to limit the use of the price-to-earnings ratio to establishing what the market thinks about the overall health of a company.  As we suspected, our examination of Sigma Healthcare's analyst forecasts revealed that its superior earnings outlook is contributing to its high P/E.  At this stage investors feel the potential for a deterioration in earnings isn't great enough to justify a lower P/E ratio.  Unless these conditions change, they will continue to provide strong support to the share price.      Don't forget that there may be other risks. For instance, we've identified   1 warning sign for Sigma Healthcare  that you should be aware of.   Of course, you might also be able to find a better stock than Sigma Healthcare. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly. New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave 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":"4.36.0","shortVersion":"4.36.0","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/2604431179","isCrawlerRequest":true}