Despite an already strong run, Easy Smart Group Holdings Limited (HKG:2442) shares have been powering on, with a gain of 28% in the last thirty days. While recent buyers may be laughing, long-term holders might not be as pleased since the recent gain only brings the stock back to where it started a year ago.
Since its price has surged higher, given close to half the companies in Hong Kong have price-to-earnings ratios (or "P/E's") below 9x, you may consider Easy Smart Group Holdings as a stock to avoid entirely with its 16.7x P/E ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/E.
Recent times have been quite advantageous for Easy Smart Group Holdings as its earnings have been rising very briskly. It seems that many are expecting the strong earnings performance to beat most other companies over the coming period, which has increased investors' willingness to pay up for the stock. If not, then existing shareholders might be a little nervous about the viability of the share price.
Check out our latest analysis for Easy Smart Group Holdings
SEHK:2442 Price to Earnings Ratio vs Industry January 15th 2024 We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Easy Smart Group Holdings' earnings, revenue and cash flow.
How Is Easy Smart Group Holdings' Growth Trending?
There's an inherent assumption that a company should far outperform the market for P/E ratios like Easy Smart Group Holdings' to be considered reasonable.
If we review the last year of earnings growth, the company posted a terrific increase of 45%. As a result, it also grew EPS by 19% in total over the last three years. Accordingly, shareholders would have probably been satisfied with the medium-term rates of earnings growth.
Comparing that to the market, which is predicted to deliver 22% growth in the next 12 months, the company's momentum is weaker based on recent medium-term annualised earnings results.
With this information, we find it concerning that Easy Smart Group Holdings is trading at a P/E higher than the market. Apparently many investors in the company are way more bullish than recent times would indicate and aren't willing to let go of their stock at any price. Only the boldest would assume these prices are sustainable as a continuation of recent earnings trends is likely to weigh heavily on the share price eventually.
What We Can Learn From Easy Smart Group Holdings' P/E?
Easy Smart Group Holdings' P/E is flying high just like its stock has during the last month. We'd say the price-to-earnings ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.
We've established that Easy Smart Group Holdings currently trades on a much higher than expected P/E since its recent three-year growth is lower than the wider market forecast. When we see weak earnings with slower than market growth, we suspect the share price is at risk of declining, sending the high P/E lower. If recent medium-term earnings trends continue, it will place shareholders' investments at significant risk and potential investors in danger of paying an excessive premium.
You should always think about risks. Case in point, we've spotted 2 warning signs for Easy Smart Group Holdings you should be aware of, and 1 of them is concerning.
Of course, you might also be able to find a better stock than Easy Smart Group Holdings. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.
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根据这些信息,我们发现Easy Smart Group Holdings的市盈率高于市场。显然,该公司的许多投资者比最近所表示的要看涨得多,他们不愿意以任何价格抛售股票。只有最大胆的人才会假设这些价格是可持续的,因为近期收益趋势的延续最终可能会严重压制股价。
我们可以从Easy Smart Group Holdings的市盈率中学到什么?
Easy Smart Group Holdings的市盈率与上个月的股票一样飞涨。我们可以说,市盈率的力量主要不在于作为估值工具,而是衡量当前投资者情绪和未来预期。
我们已经确定,Easy Smart Group Holdings目前的市盈率远高于预期,因为其最近三年的增长低于更广泛的市场预期。当我们看到收益疲软,增长速度慢于市场增长时,我们怀疑股价有下跌的风险,从而降低高市盈率。如果最近的中期收益趋势继续下去,这将使股东的投资面临重大风险,潜在投资者面临支付过高溢价的危险。
你应该时刻考虑风险。举个例子,我们发现了你应该注意的两个Easy Smart Group Holdings的警告信号,其中一个令人担忧。
当然,你也许还能找到比Easy Smart Group Holdings更好的股票。因此,你不妨免费查看其他市盈率合理且收益强劲增长的公司。