The Thinkingdom Media Group Ltd. (SHSE:603096) share price has fared very poorly over the last month, falling by a substantial 26%. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 33% in that time.
In spite of the heavy fall in price, Thinkingdom Media Group's price-to-earnings (or "P/E") ratio of 16.1x might still make it look like a buy right now compared to the market in China, where around half of the companies have P/E ratios above 27x and even P/E's above 48x are quite common. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's limited.
With its earnings growth in positive territory compared to the declining earnings of most other companies, Thinkingdom Media Group has been doing quite well of late. It might be that many expect the strong earnings performance to degrade substantially, possibly more than the market, which has repressed the P/E. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.
SHSE:603096 Price to Earnings Ratio vs Industry February 11th 2024 If you'd like to see what analysts are forecasting going forward, you should check out our free report on Thinkingdom Media Group.
How Is Thinkingdom Media Group's Growth Trending?
In order to justify its P/E ratio, Thinkingdom Media Group would need to produce sluggish growth that's trailing the market.
If we review the last year of earnings growth, the company posted a worthy increase of 11%. Ultimately though, it couldn't turn around the poor performance of the prior period, with EPS shrinking 33% in total over the last three years. So unfortunately, we have to acknowledge that the company has not done a great job of growing earnings over that time.
Looking ahead now, EPS is anticipated to climb by 36% during the coming year according to the four analysts following the company. With the market predicted to deliver 41% growth , the company is positioned for a weaker earnings result.
With this information, we can see why Thinkingdom Media Group is trading at a P/E lower than the market. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.
The Key Takeaway
The softening of Thinkingdom Media Group's shares means its P/E is now sitting at a pretty low level. Generally, our preference is to limit the use of the price-to-earnings ratio to establishing what the market thinks about the overall health of a company.
We've established that Thinkingdom Media Group maintains its low P/E on the weakness of its forecast growth being lower than the wider market, as expected. At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio. It's hard to see the share price rising strongly in the near future under these circumstances.
It's always necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Thinkingdom Media Group, and understanding should be part of your investment process.
Of course, you might find a fantastic investment by looking at a few good candidates. So take a peek at this free list of companies with a strong growth track record, trading on a low P/E.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Thinkingdom Media Group Ltd.(上海证券交易所代码:603096)的股价在上个月表现非常糟糕,大幅下跌了26%。过去30天的下跌结束了股东艰难的一年,股价在此期间下跌了33%。
尽管价格大幅下跌,但Thinkingdom Media Group的市盈率(或 “市盈率”)为16.1倍,与中国市场相比,目前仍可能看起来像买入,中国约有一半的公司的市盈率超过27倍,甚至市盈率超过48倍也很常见。但是,仅按面值计算市盈率是不明智的,因为可以解释为什么市盈率有限。
与大多数其他公司的收益下降相比,Thinkingdom Media Group的收益增长处于正值区间,最近表现良好。许多人可能预计,强劲的盈利表现将大幅下降,可能超过抑制市盈率的市场。如果你喜欢该公司,你会希望情况并非如此,这样你就有可能在股票失宠的时候买入一些股票。