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Do You Know What Shore Bancshares, Inc.’s (NASDAQ:SHBI) P/E Ratio Means?

Sean Barnes

The goal of this article is to teach you how to use price to earnings ratios (P/E ratios). To keep it practical, we’ll show how Shore Bancshares, Inc.’s (NASDAQ:SHBI) P/E ratio could help you assess the value on offer. Shore Bancshares has a P/E ratio of 12.32, based on the last twelve months. In other words, at today’s prices, investors are paying $12.32 for every $1 in prior year profit.

See our latest analysis for Shore Bancshares

How Do I Calculate A Price To Earnings Ratio?

The formula for P/E is:


Or for Shore Bancshares:

P/E of 12.32 = $15.1 ÷ $1.23 (Based on the trailing twelve months to September 2018.)

Is A High Price-to-Earnings Ratio Good?


How Growth Rates Impact P/E Ratios


Notably, Shore Bancshares grew EPS by a whopping 41% in the last year. And it has bolstered its earnings per share by 55% per year over the last five years. With that performance, I would expect it to have an above average P/E ratio.

How Does Shore Bancshares’s P/E Ratio Compare To Its Peers?

The P/E ratio essentially measures market expectations of a company. The image below shows that Shore Bancshares has a lower P/E than the average (14.2) P/E for companies in the banks industry.

NASDAQGS:SHBI PE PEG Gauge January 24th 19





How Does Shore Bancshares’s Debt Impact Its P/E Ratio?

Net debt totals 34% of Shore Bancshares’s market cap. If you want to compare its P/E ratio to other companies, you should absolutely keep in mind it has significant borrowings.

The Bottom Line On Shore Bancshares’s P/E Ratio

Shore Bancshares trades on a P/E ratio of 12.3, which is below the US market average of 16.9. The company does have a little debt, and EPS growth was good last year. If it continues to grow, then the current low P/E may prove to be unjustified. Given analysts are expecting further growth, one might have expected a higher P/E ratio. That may be worth further research.


You might be able to find a better buy than Shore Bancshares. If you want a selection of possible winners, check out this free list of interesting companies that trade on a P/E below 20 (but have proven they can grow earnings).

