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Should You Buy Mobile Mini Inc (NASDAQ:MINI) At This PE Ratio?

The content of this article will benefit those of you who are starting to educate yourself about investing in the stock market and want to begin learning the link between Mobile Mini Inc (NASDAQ:MINI)’s fundamentals and stock market performance.

Mobile Mini Inc (NASDAQ:MINI) is trading with a trailing P/E of 16x, which is lower than the industry average of 18.3x. Although some investors may jump to the conclusion that this is a great buying opportunity, understanding the assumptions behind the P/E ratio might change your mind. Today, I will deconstruct the P/E ratio and highlight what you need to be careful of when using the P/E ratio. View out our latest analysis for Mobile Mini

What you need to know about the P/E ratio

NasdaqGS:MINI PE PEG Gauge June 22nd 18
NasdaqGS:MINI PE PEG Gauge June 22nd 18

The P/E ratio is a popular ratio used in relative valuation since earnings power is a key driver of investment value. By comparing a stock’s price per share to its earnings per share, we are able to see how much investors are paying for each dollar of the company’s earnings.

P/E Calculation for MINI

Price-Earnings Ratio = Price per share ÷ Earnings per share

MINI Price-Earnings Ratio = $46.05 ÷ $2.879 = 16x

On its own, the P/E ratio doesn’t tell you much; however, it becomes extremely useful when you compare it with other similar companies. Our goal is to compare the stock’s P/E ratio to the average of companies that have similar attributes to MINI, such as company lifetime and products sold. A quick method of creating a peer group is to use companies in the same industry, which is what I will do. At 16x, MINI’s P/E is lower than its industry peers (18.3x). This implies that investors are undervaluing each dollar of MINI’s earnings. Therefore, according to this analysis, MINI is an under-priced stock.

A few caveats

While our conclusion might prompt you to buy MINI immediately, there are two important assumptions you should be aware of. Firstly, our peer group contains companies that are similar to MINI. If this isn’t the case, the difference in P/E could be due to other factors. For example, if you compared lower risk firms with MINI, then investors would naturally value it at a lower price since it is a riskier investment. The second assumption that must hold true is that the stocks we are comparing MINI to are fairly valued by the market. If this does not hold, there is a possibility that MINI’s P/E is lower because our peer group is overvalued by the market.

What this means for you:

Since you may have already conducted your due diligence on MINI, the undervaluation of the stock may mean it is a good time to top up on your current holdings. But at the end of the day, keep in mind that relative valuation relies heavily on critical assumptions I’ve outlined above. Remember that basing your investment decision off one metric alone is certainly not sufficient. There are many things I have not taken into account in this article and the PE ratio is very one-dimensional. If you have not done so already, I urge you to complete your research by taking a look at the following:

  1. Future Outlook: What are well-informed industry analysts predicting for MINI’s future growth? Take a look at our free research report of analyst consensus for MINI’s outlook.

  2. Past Track Record: Has MINI been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of MINI’s historicals for more clarity.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.

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