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    There's No Escaping Cantaloupe, Inc.'s (NASDAQ:CTLP) Muted Earnings Despite A 28% Share Price Rise

    Simply Wall St·06/11/2025 10:10:03
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    The Cantaloupe, Inc. (NASDAQ:CTLP) share price has done very well over the last month, posting an excellent gain of 28%. The last 30 days bring the annual gain to a very sharp 40%.

    Although its price has surged higher, given about half the companies in the United States have price-to-earnings ratios (or "P/E's") above 19x, you may still consider Cantaloupe as an attractive investment with its 12.1x P/E ratio. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's limited.

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    Recent times have been advantageous for Cantaloupe as its earnings have been rising faster 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 not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.

    See our latest analysis for Cantaloupe

    pe-multiple-vs-industry
    NasdaqGS:CTLP Price to Earnings Ratio vs Industry June 11th 2025
    Keen to find out how analysts think Cantaloupe's future stacks up against the industry? In that case, our free report is a great place to start.

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

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

    If we review the last year of earnings growth, the company posted a terrific increase of 390%. Pleasingly, EPS has also lifted 2,339% in aggregate from three years ago, thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing earnings over that time.

    Shifting to the future, estimates from the six analysts covering the company suggest earnings growth is heading into negative territory, declining 32% over the next year. That's not great when the rest of the market is expected to grow by 13%.

    With this information, we are not surprised that Cantaloupe 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. There's potential for the P/E to fall to even lower levels if the company doesn't improve its profitability.

    What We Can Learn From Cantaloupe's P/E?

    Cantaloupe's stock might have been given a solid boost, but its P/E certainly hasn't reached any great heights. 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 Cantaloupe 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. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

    And what about other risks? Every company has them, and we've spotted 2 warning signs for Cantaloupe you should know about.

    You might be able to find a better investment than Cantaloupe. 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).