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    Subdued Growth No Barrier To OPENLANE, Inc. (NYSE:KAR) With Shares Advancing 25%

    Simply Wall St·12/25/2025 10:25:15
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    OPENLANE, Inc. (NYSE:KAR) shareholders would be excited to see that the share price has had a great month, posting a 25% gain and recovering from prior weakness. Looking back a bit further, it's encouraging to see the stock is up 51% in the last year.

    After such a large jump in price, OPENLANE may be sending very bearish signals at the moment with a price-to-earnings (or "P/E") ratio of 34.7x, since almost half of all companies in the United States have P/E ratios under 19x and even P/E's lower than 11x 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 so lofty.

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    Recent times have been advantageous for OPENLANE as its earnings have been rising faster than most other companies. It seems that many are expecting the strong earnings performance to persist, which has raised the P/E. If not, then existing shareholders might be a little nervous about the viability of the share price.

    View our latest analysis for OPENLANE

    pe-multiple-vs-industry
    NYSE:KAR Price to Earnings Ratio vs Industry December 25th 2025
    If you'd like to see what analysts are forecasting going forward, you should check out our free report on OPENLANE.

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

    OPENLANE's P/E ratio would be typical for a company that's expected to deliver very strong growth, and importantly, perform much better than the market.

    Retrospectively, the last year delivered an exceptional 361% gain to the company's bottom line. Although, its longer-term performance hasn't been as strong with three-year EPS growth being relatively non-existent overall. Therefore, it's fair to say that earnings growth has been inconsistent recently for the company.

    Turning to the outlook, the next year should generate growth of 13% as estimated by the eight analysts watching the company. Meanwhile, the rest of the market is forecast to expand by 16%, which is noticeably more attractive.

    With this information, we find it concerning that OPENLANE is trading at a P/E higher than the market. It seems most investors are hoping for a turnaround in the company's business prospects, but the analyst cohort is not so confident this will happen. There's a good chance these shareholders are setting themselves up for future disappointment if the P/E falls to levels more in line with the growth outlook.

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

    Shares in OPENLANE have built up some good momentum lately, which has really inflated its 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.

    We've established that OPENLANE currently trades on a much higher than expected P/E since its forecast growth is lower than the wider market. Right now we are increasingly uncomfortable with the high P/E as the predicted future earnings aren't likely to support such positive sentiment for long. Unless these conditions improve markedly, it's very challenging to accept these prices as being reasonable.

    We don't want to rain on the parade too much, but we did also find 1 warning sign for OPENLANE that you need to be mindful of.

    Of course, you might also be able to find a better stock than OPENLANE. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.