They also discuss PE "expansion" but to me this is only relevant when compared to it's peers. Then one could justify expansion if current and/or forward PE is significantly lower than it's peers.
Funny you should look at Forward PE's
Phibro Anl Htlh A (PAHC); 13.3x PE 1.88% div
Phibro Animal Health Corporation is a leading global diversified animal health and mineral nutrition company. The company provides a broad range of products for food animals including poultry, swine, beef and dairy cattle and aquaculture. In addition to animal health and mineral nutrition products
I have built an oversize position in Phibro Anl Htlh A (PAHC) at an avg price of $9.89/share; it's still really cheap compared to forward PE and to it's peers. +265% from my avg cost BUT could move +60% MORE !
Also own ELAN mentioned in the last question below
Here is an AI search I did today on the subject:
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Phibro Animal Health Corporation (PAHC) operates on a fiscal year that ends on June 30th. This means:
- The "last half of 2025" refers to their fiscal Q4 2025 (April 1, 2025 - June 30, 2025) and fiscal Q1 2026 (July 1, 2025 - September 30, 2025).
- "Full year 2026" refers to their fiscal year 2026 (July 1, 2025 - June 30, 2026).
Here's what the available information suggests for PAHC's expected earnings:
Last Half of Fiscal Year 2025 (Q4 2025):
- Expected EPS: The consensus EPS forecast for fiscal Q4 2025 (period ending June 30, 2025) is $0.52.
- Total Earnings: Phibro's full fiscal year 2025 Adjusted EPS guidance is between $1.96 and $2.09. Given their reported Adjusted EPS for Q1, Q2, and Q3 2025 were $0.35, $0.54, and $0.63 respectively, the expected Q4 EPS of $0.52 falls within the range to achieve the full-year guidance.
Full Fiscal Year 2026:
- Expected EPS: Analysts expect PAHC's earnings per share to be $2.23 - $2.29 for the full fiscal year 2026.
- Total Earnings: Based on analyst forecasts, the total earnings (net income) for fiscal year 2026 are expected to be in the range of $88.36 million to $98.50 million, with an average forecast around $92.92 million.
Summary of Earnings Per Share (EPS):
- Fiscal Q4 2025 (last half of 2025): Expected EPS of $0.52
- Full Fiscal Year 2026: Expected EPS range of $2.23 - $2.29
Please note that these are analyst consensus estimates and company guidance, and actual results may vary.
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It's interesting to compare the current and projected earnings for Phibro Animal Health Corporation (PAHC) with their past performance. Keep in mind that "full year" refers to their fiscal year, which ends on June 30th.
Here's how the expected earnings for Fiscal Year 2026 compare to Fiscal Years 2017 and 2018:
Full Fiscal Year 2017 (ended June 30, 2017):
- Reported Diluted EPS: $1.61
- Adjusted Diluted EPS: $1.51
- Net Income: Approximately $64.6 million
Full Fiscal Year 2018 (ended June 30, 2018):
- Reported Diluted EPS: $1.60 (Macrotrends also shows $1.61)
- Adjusted Diluted EPS: $1.74
- Net Income: Approximately $100 million (Companies Market Cap shows $0.10 billion)
Expected Full Fiscal Year 2026 (July 1, 2025 - June 30, 2026):
- Expected EPS: $2.23 - $2.29
- Expected Net Income: $88.36 million to $98.50 million, with an average around $92.92 million
Comparison:
- EPS: The expected EPS for fiscal year 2026 ($2.23 - $2.29) is significantly higher than the reported diluted EPS for both fiscal year 2017 ($1.61) and fiscal year 2018 ($1.60-$1.74). This suggests a projected increase in profitability per share.
- Total Earnings (Net Income): While the expected net income for fiscal year 2026 (average ~$92.92 million) is in a similar range to fiscal year 2017 (~$64.6 million) and fiscal year 2018 (~$100 million), it's important to consider any changes in outstanding shares. The higher EPS despite a comparable net income range to 2018 might indicate a reduction in the number of shares outstanding, leading to a higher earnings per share for investors.
In summary, Phibro Animal Health Corporation is projected to achieve higher earnings per share in fiscal year 2026 compared to its performance in fiscal years 2017 and 2018.
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Stock sold almost twice as much in 2018
stock sold in the $40's in 2018 what was/is the normalized PE and compare that for 2026 estimates? What;s the difference
Let's break down the normalized P/E (Price-to-Earnings) for Phibro Animal Health (PAHC) in 2018 and compare it to 2026 estimates.
The P/E ratio is calculated as: Stock Price / Earnings Per Share (EPS). A "normalized" P/E often refers to using a more stable or recurring earnings figure, excluding one-time gains or losses, or simply using the reported diluted EPS for consistency in comparison.
1. Normalized P/E in 2018:
- Stock Price: PAHC's stock sold in the $40s in 2018. Macrotrends indicates that the all-time high closing price for PAHC was $45.11 on August 27, 2018. Let's use a range, say $40 to $45 for the stock price in 2018 to represent "the $40s."
- Full Fiscal Year 2018 Diluted EPS: PAHC's reported diluted EPS for fiscal year 2018 (ended June 30, 2018) was approximately $1.60 - $1.61.
- Calculation:
- If stock price was $40: P/E = $40 / $1.61 = 24.84
- If stock price was $45: P/E = $45 / $1.61 = 27.95
- Macrotrends also shows a P/E ratio of 28.6 for PAHC in 2018, based on a price of $46.05 and EPS of $1.61. This aligns with our calculation.
Normalized P/E for 2018 (range): ~24.8x to 28.6x
2. Normalized P/E for 2026 Estimates:
- Stock Price: As of July 1, 2025, PAHC's stock is trading around the mid-$20s. Let's use the current stock price of $25.66 (from Macrotrends as of June 27, 2025, which is the most recent data available to me for "current" price as of the current date of July 1, 2025) for this calculation, as this is the current valuation being applied to future earnings.
- Full Fiscal Year 2026 Estimated EPS: The consensus EPS forecast for fiscal year 2026 is $2.23 - $2.29. Let's use the average of $2.26 for our calculation.
- Calculation:
- P/E = $25.66 / $2.26 = 11.35
Normalized P/E for 2026 Estimates: ~11.35x
3. Difference in P/E Ratios:
- Difference (using the higher end of 2018 range and 2026 estimate): 28.6 - 11.35 = 17.25
- Difference (using the lower end of 2018 range and 2026 estimate): 24.84 - 11.35 = 13.49
Conclusion:
The normalized P/E ratio for PAHC in 2018, when the stock was trading in the $40s, was roughly 25x to 29x.
For 2026, based on current stock prices and analyst EPS estimates, the projected P/E ratio is significantly lower, around 11.35x.
The difference is substantial, indicating a decrease in the market's willingness to pay for each dollar of PAHC's earnings. This could be due to several factors, including:
- Slower Growth Expectations: While EPS is projected to be higher, the rate of growth might be lower or less certain than what the market expected in 2018, leading to a lower multiple.
- Increased Risk Perception: The market might perceive higher risks associated with PAHC's business or the animal health industry in general.
- Broader Market Trends: Overall market valuations (P/E ratios for the general market or the sector) might have compressed since 2018.
- Company-Specific Factors: Changes in company strategy, debt levels, or competitive landscape could influence investor sentiment and, consequently, the P/E multiple
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My Final Question Could we see PE expansion in 2026? How is that PE when you compare to competitors in the same industry?
Let's explore the potential for P/E expansion for Phibro Animal Health (PAHC) in 2026 and compare its P/E to its industry peers.
Could we see P/E expansion in 2026 for PAHC?
A P/E expansion means the market is willing to assign a higher multiple to a company's earnings. This typically happens when:
- Improved Growth Prospects: If PAHC can demonstrate sustained, strong earnings growth beyond current analyst estimates, investors might re-rate the stock. For example, if new product launches or market share gains prove more successful than anticipated.
- Enhanced Profitability/Margins: Significant improvements in operating efficiency or profit margins could make the company more attractive and warrant a higher multiple.
- Reduced Risk Perception: If the market perceives PAHC's business to be less risky (e.g., more stable revenue streams, strong balance sheet, favorable regulatory environment), investors might demand a lower earnings yield (and thus accept a higher P/E).
- Stronger Industry Outlook: A generally bullish sentiment or improved fundamentals across the animal health industry could lift all boats, including PAHC.
- Share Buybacks: Aggressive share buybacks can reduce the number of outstanding shares, increasing EPS and potentially leading to P/E expansion if the market values this capital allocation.
- Analyst Upgrades and Positive News Flow: Consistent positive analyst recommendations and favorable news can attract more institutional and retail investors, driving up demand and P/E.
Given PAHC's current P/E of around 11.35x based on 2026 estimates (and a stock price around $25.66), and its historical P/E in the 20s, there's certainly room for P/E expansion. However, it would likely require one or more of the factors above to materialize. Analyst consensus currently leans towards "Sell" for PAHC, with average price targets lower than the current stock price, suggesting that significant P/E expansion is not currently priced in. This doesn't mean it won't happen, but it points to the current market sentiment.
How does PAHC's P/E compare to competitors in the same industry?
To assess PAHC's P/E in context, it's crucial to compare it to its peers in the animal health industry. Key players in this sector include:
- Zoetis Inc. (ZTS): One of the largest animal health companies.
- Elanco Animal Health Inc. (ELAN): Another major player in animal health.
- IDEXX Laboratories Inc. (IDXX): Focuses on veterinary diagnostics and software.
Let's look at their current (or most recent available) P/E ratios:
- Zoetis (ZTS): As of late June 2025, Zoetis has a P/E ratio of approximately 28.0x - 29.5x. Nasdaq's forecast suggests a P/E of around 23.0x for 2026 estimates.
- Elanco Animal Health (ELAN): As of late June 2025, Elanco's P/E ratio is around 17.9x. Nasdaq's forecast suggests a P/E of around 14.2x for 2026 estimates.
- IDEXX Laboratories (IDXX): As of late June 2025, IDEXX has a P/E ratio of approximately 49.0x.
Comparison to PAHC's 2026 Estimated P/E (approx. 11.35x):
When compared to these major industry players, PAHC's estimated 2026 P/E of 11.35x is significantly lower.
- PAHC's P/E is notably lower than Zoetis (23.0x - 29.5x).
- PAHC's P/E is also lower than Elanco (14.2x - 17.9x).
- PAHC's P/E is vastly lower than IDEXX (49.0x).
Implications of the P/E Difference:
This disparity in P/E ratios suggests that the market currently assigns a much lower valuation multiple to PAHC's earnings compared to its larger, more established peers. This could be due to several reasons:
- Scale and Market Dominance: Zoetis and IDEXX are market leaders with significant scale, broader product portfolios, and often, more consistent growth. Larger companies often command higher multiples due to perceived stability and lower risk.
- Growth Profile: While PAHC is growing, its growth trajectory or consistency might be perceived as lower or more volatile compared to some peers, especially the higher-multiple companies like IDEXX (which has a strong recurring revenue diagnostics business).
- Profitability and Margins: Larger players often benefit from economies of scale and may have higher or more stable profit margins, justifying a higher P/E.
- Debt Levels and Financial Health: Differences in balance sheet strength can influence P/E.
- Product Diversification and Innovation Pipeline: Companies with robust R&D pipelines and diversified product offerings might be seen as having greater future potential.
- Analyst Sentiment: As noted earlier, current analyst sentiment for PAHC is relatively cautious, while competitors might have more favorable ratings.
In conclusion, while PAHC's estimated 2026 P/E of around 11.35x appears low compared to its historical P/E and significantly lower than major competitors, whether it experiences P/E expansion will depend on its ability to demonstrate sustained, high-quality earnings growth, reduce perceived risk, or benefit from a broader positive re-rating of the animal health sector. The current valuation suggests that the market is cautious, possibly offering a "value" opportunity if PAHC can outperform expectations. |
