Unpleasant Surprises Could Be In Store For Computershare Limited's (ASX:CPU) Shares

It's not a stretch to say that Computershare Limited's (ASX:CPU) price-to-earnings (or "P/E") ratio of 21.7x right now seems quite "middle-of-the-road" compared to the market in Australia, where the median P/E ratio is around 21x. While this might not raise any eyebrows, if the P/E ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. Computershare 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 moderate because investors think this strong earnings performance might be about to tail off. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price. Check out our latest analysis for Computershare ASX:CPU Price to Earnings Ratio vs Industry December 20th 2025 Keen to find out how analysts think Computershare's future stacks up against the industry? In that case, our free report is a great place to start. Is There Some Growth For Computershare? The only time you'd be comfortable seeing a P/E like Computershare's is when the company's growth is tracking the market closely. Retrospectively, the last year delivered an exceptional 25% gain to the company's bottom line. The latest three year period has also seen an excellent 177% overall rise in EPS, aided by its short-term performance. So we can start by confirming that the company has done a great job of growing earnings over that time. Looking ahead now, EPS is anticipated to climb by 8.7% each year during the coming three years according to the twelve analysts following the company. With the market predicted to deliver 17% growth each year, the company is positioned for a weaker earnings result. In light of this, it's curious that Computershare's P/E sits in line with the majority of other companies. It seems most investors are ignoring the fairly limited growth expectations and are willing to pay up for exposure to the stock. These shareholders may be 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 Computershare's 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. Our examination of Computershare's analyst forecasts revealed that its inferior earnings outlook isn't impacting its P/E as much as we would have predicted. When we see a weak earnings outlook with slower than market growth, we suspect the share price is at risk of declining, sending the moderate P/E lower. This places shareholders' investments at risk and potential investors in danger of paying an unnecessary premium. It is also worth noting that we have found 1 warning sign for Computershare that you need to take into consideration. If these risks are making you reconsider your opinion on Computershare, explore our interactive list of high quality stocks to get an idea of what else is out there. Mobile Infrastructure for Defense and DisasterThe next wave in robotics isn't humanoid. Its fully autonomous towers delivering 5G, ISR, and radar in under 30 minutes, anywhere.Get the investor briefing before the next round of contractsSponsored On Behalf of CiTech