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    A Piece Of The Puzzle Missing From Taylor Devices, Inc.'s (NASDAQ:TAYD) 27% Share Price Climb

    Simply Wall St·05/16/2025 10:01:23
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    Taylor Devices, Inc. (NASDAQ:TAYD) shareholders have had their patience rewarded with a 27% share price jump in the last month. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 22% over that time.

    Although its price has surged higher, Taylor Devices may still be sending bullish signals at the moment with its price-to-earnings (or "P/E") ratio of 15.3x, since almost half of all companies in the United States have P/E ratios greater than 18x and even P/E's higher than 32x are not unusual. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's limited.

    We check all companies for important risks. See what we found for Taylor Devices in our free report.

    Earnings have risen at a steady rate over the last year for Taylor Devices, which is generally not a bad outcome. One possibility is that the P/E is low because investors think this good earnings growth might actually underperform the broader market in the near future. 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.

    See our latest analysis for Taylor Devices

    pe-multiple-vs-industry
    NasdaqCM:TAYD Price to Earnings Ratio vs Industry May 16th 2025
    We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Taylor Devices' earnings, revenue and cash flow.

    Does Growth Match The Low P/E?

    In order to justify its P/E ratio, Taylor Devices would need to produce sluggish growth that's trailing the market.

    Taking a look back first, we see that the company managed to grow earnings per share by a handy 4.6% last year. This was backed up an excellent period prior to see EPS up by 1,066% in total over the last three years. So we can start by confirming that the company has done a great job of growing earnings over that time.

    This is in contrast to the rest of the market, which is expected to grow by 13% over the next year, materially lower than the company's recent medium-term annualised growth rates.

    With this information, we find it odd that Taylor Devices is trading at a P/E lower than the market. Apparently some shareholders believe the recent performance has exceeded its limits and have been accepting significantly lower selling prices.

    The Key Takeaway

    Despite Taylor Devices' shares building up a head of steam, its P/E still lags most other companies. Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

    We've established that Taylor Devices currently trades on a much lower than expected P/E since its recent three-year growth is higher than the wider market forecast. There could be some major unobserved threats to earnings preventing the P/E ratio from matching this positive performance. At least price risks look to be very low if recent medium-term earnings trends continue, but investors seem to think future earnings could see a lot of volatility.

    A lot of potential risks can sit within a company's balance sheet. You can assess many of the main risks through our free balance sheet analysis for Taylor Devices with six simple checks.

    You might be able to find a better investment than Taylor Devices. If you want a selection of possible candidates, check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).