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    Lacklustre Performance Is Driving National Research Corporation's (NASDAQ:NRC) 30% Price Drop

    Simply Wall St·04/22/2025 10:45:30
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    To the annoyance of some shareholders, National Research Corporation (NASDAQ:NRC) shares are down a considerable 30% in the last month, which continues a horrid run for the company. For any long-term shareholders, the last month ends a year to forget by locking in a 70% share price decline.

    In spite of the heavy fall in price, National Research's price-to-earnings (or "P/E") ratio of 9.4x might still make it look like a 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 30x are quite common. However, the P/E might be low for a reason and it requires further investigation to determine if it's justified.

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    As an illustration, earnings have deteriorated at National Research over the last year, which is not ideal at all. It might be that many expect the disappointing earnings performance to continue or accelerate, which has repressed the P/E. 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.

    Check out our latest analysis for National Research

    pe-multiple-vs-industry
    NasdaqGS:NRC Price to Earnings Ratio vs Industry April 22nd 2025
    Although there are no analyst estimates available for National Research, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.

    Is There Any Growth For National Research?

    The only time you'd be truly comfortable seeing a P/E as low as National Research's is when the company's growth is on track to lag the market.

    If we review the last year of earnings, dishearteningly the company's profits fell to the tune of 17%. This means it has also seen a slide in earnings over the longer-term as EPS is down 27% in total over the last three years. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.

    In contrast to the company, the rest of the market is expected to grow by 13% over the next year, which really puts the company's recent medium-term earnings decline into perspective.

    With this information, we are not surprised that National Research is trading at a P/E lower than the market. Nonetheless, there's no guarantee the P/E has reached a floor yet with earnings going in reverse. There's potential for the P/E to fall to even lower levels if the company doesn't improve its profitability.

    The Key Takeaway

    National Research's recently weak share price has pulled its P/E below most other companies. 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.

    As we suspected, our examination of National Research revealed its shrinking earnings over the medium-term are contributing to its low P/E, given the market is set to grow. Right now shareholders are accepting the low P/E as they concede future earnings probably won't provide any pleasant surprises. If recent medium-term earnings trends continue, it's hard to see the share price moving strongly in either direction in the near future under these circumstances.

    Before you take the next step, you should know about the 3 warning signs for National Research (1 is potentially serious!) that we have uncovered.

    Of course, you might find a fantastic investment by looking at a few good candidates. So take a peek at this free list of companies with a strong growth track record, trading on a low P/E.