With a price-to-earnings (or "P/E") ratio of 70.1x TKD Science and Technology Co.,Ltd. (SHSE:603738) may be sending very bearish signals at the moment, given that almost half of all companies in China have P/E ratios under 34x and even P/E's lower than 20x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/E.
With earnings that are retreating more than the market's of late, TKD Science and TechnologyLtd has been very sluggish. It might be that many expect the dismal earnings performance to recover substantially, which has kept the P/E from collapsing. If not, then existing shareholders may be very nervous about the viability of the share price.
See our latest analysis for TKD Science and TechnologyLtd
SHSE:603738 Price to Earnings Ratio vs Industry January 9th 2024 Keen to find out how analysts think TKD Science and TechnologyLtd's future stacks up against the industry? In that case, our free report is a great place to start.
Does Growth Match The High P/E?
In order to justify its P/E ratio, TKD Science and TechnologyLtd would need to produce outstanding growth well in excess of the market.
Taking a look back first, the company's earnings per share growth last year wasn't something to get excited about as it posted a disappointing decline of 66%. Even so, admirably EPS has lifted 337% in aggregate from three years ago, notwithstanding the last 12 months. Although it's been a bumpy ride, it's still fair to say the earnings growth recently has been more than adequate for the company.
Looking ahead now, EPS is anticipated to climb by 108% during the coming year according to the one analyst following the company. With the market only predicted to deliver 43%, the company is positioned for a stronger earnings result.
With this information, we can see why TKD Science and TechnologyLtd is trading at such a high P/E compared to the market. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.
The Key Takeaway
Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.
We've established that TKD Science and TechnologyLtd maintains its high P/E on the strength of its forecast growth being higher than the wider market, as expected. At this stage investors feel the potential for a deterioration in earnings isn't great enough to justify a lower P/E ratio. Unless these conditions change, they will continue to provide strong support to the share price.
And what about other risks? Every company has them, and we've spotted 3 warning signs for TKD Science and TechnologyLtd you should know about.
If P/E ratios interest you, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.
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市盈率(或 “市盈率”)为70.1倍TKD Science and Technology Co., Ltd.(SHSE: 603738)目前可能发出了非常看跌的信号,因为几乎一半的中国公司的市盈率低于34倍,甚至市盈率低于20倍也并不罕见。尽管如此,我们需要更深入地挖掘,以确定市盈率大幅上涨是否有合理的基础。
TKD Science and TechnologyLtd的收益比最近的市场回落幅度更大,一直非常疲软。许多人可能预计,惨淡的收益表现将大幅恢复,这阻止了市盈率的暴跌。如果不是,那么现有股东可能会对股价的可行性感到非常担忧。