Realology Holdings Corp.(纽约证券交易所代码：RLGY)的良性增长支撑了股市31%的暴跌

The Realogy Holdings Corp. (NYSE:RLGY) share price has fared very poorly over the last month, falling by a substantial 31%. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 37% share price drop.

Since its price has dipped substantially, Realogy Holdings' price-to-earnings (or "P/E") ratio of 3.9x might make it look like a strong buy right now compared to the market in the United States, where around half of the companies have P/E ratios above 17x and even P/E's above 34x are quite common. However, the P/E might be quite low for a reason and it requires further investigation to determine if it's justified.

Realogy Holdings certainly has been doing a good job lately as it's been growing earnings more than most other companies. One possibility is that the P/E is low because investors think this strong earnings performance might be less impressive moving forward. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

View our latest analysis for Realogy Holdings

NYSE:RLGY Price Based on Past Earnings April 30th 2022 If you'd like to see what analysts are forecasting going forward, you should check out our free report on Realogy Holdings.

What Are Growth Metrics Telling Us About The Low P/E?

The only time you'd be truly comfortable seeing a P/E as depressed as Realogy Holdings' is when the company's growth is on track to lag the market decidedly.

Retrospectively, the last year delivered an exceptional 144% gain to the company's bottom line. The latest three year period has also seen an excellent 170% overall rise in EPS, aided by its short-term performance. Accordingly, shareholders would have probably welcomed those medium-term rates of earnings growth.

Turning to the outlook, the next three years should bring diminished returns, with earnings decreasing 0.6% per year as estimated by the three analysts watching the company. That's not great when the rest of the market is expected to grow by 12% per annum.

With this information, we are not surprised that Realogy Holdings 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 Bottom Line On Realogy Holdings' P/E

Realogy Holdings' P/E looks about as weak as its stock price lately. 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 Realogy Holdings maintains its low P/E on the weakness of its forecast for sliding earnings, as expected. Right now shareholders are accepting the low P/E as they concede future earnings probably won't provide any pleasant surprises. It's hard to see the share price rising strongly in the near future under these circumstances.

You need to take note of risks, for example - Realogy Holdings has 4 warning signs (and 2 which shouldn't be ignored) we think you should know about.

If you're unsure about the strength of Realogy Holdings' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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