To the annoyance of some shareholders, Infinity Logistics and Transport Ventures Limited (HKG:1442) shares are down a considerable 26% in the last month, which continues a horrid run for the company. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 71% loss during that time.
In spite of the heavy fall in price, Infinity Logistics and Transport Ventures' price-to-earnings (or "P/E") ratio of 21.8x might still make it look like a strong sell right now compared to the market in Hong Kong, where around half of the companies have P/E ratios below 9x and even P/E's below 5x 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 so lofty.
As an illustration, earnings have deteriorated at Infinity Logistics and Transport Ventures over the last year, which is not ideal at all. It might be that many expect the company to still outplay most other companies over the coming period, which has kept the P/E from collapsing. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.
SEHK:1442 Price to Earnings Ratio vs Industry April 8th 2024 Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Infinity Logistics and Transport Ventures will help you shine a light on its historical performance.
How Is Infinity Logistics and Transport Ventures' Growth Trending?
In order to justify its P/E ratio, Infinity Logistics and Transport Ventures 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 49%. The last three years don't look nice either as the company has shrunk EPS by 30% in aggregate. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.
In contrast to the company, the rest of the market is expected to grow by 20% over the next year, which really puts the company's recent medium-term earnings decline into perspective.
In light of this, it's alarming that Infinity Logistics and Transport Ventures' P/E sits above the majority of other companies. 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.
The Key Takeaway
A significant share price dive has done very little to deflate Infinity Logistics and Transport Ventures' very lofty P/E. Using the price-to-earnings ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.
Our examination of Infinity Logistics and Transport Ventures revealed its shrinking earnings over the medium-term aren't impacting its high P/E anywhere near as much as we would have predicted, given the market is set to grow. Right now we are increasingly uncomfortable with the high P/E as this earnings performance is highly unlikely to support such positive sentiment for long. Unless the recent medium-term conditions improve markedly, it's very challenging to accept these prices as being reasonable.
It's always necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Infinity Logistics and Transport Ventures (at least 1 which is a bit concerning), and understanding these 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.
令一些股东感到烦恼的是,Infinity Logistics and Transport Ventures Limited(HKG: 1442)的股价在上个月下跌了26%,这延续了公司的糟糕表现。对于股东来说,最近的下跌结束了灾难性的十二个月,在此期间,股东亏损了71%。
尽管价格大幅下跌,但与香港市场相比,Infinity Logistics and Transport Ventures的21.8倍市盈率(或 “市盈率”)仍可能使其看起来像是强劲的抛售。在香港,约有一半公司的市盈率低于9倍,甚至市盈率低于5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如此之高。
有鉴于此,令人震惊的是,Infinity Logistics and Transport Ventures的市盈率高于其他大多数公司。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,因为近期盈利趋势的延续最终可能会严重压制股价。
关键要点
股价的大幅下跌并没有减轻Infinity Logistics and Transport Ventures非常高的市盈率。仅使用市盈率来确定是否应该出售股票是不明智的,但它可以作为公司未来前景的实用指南。
我们对Infinity Logistics and Transport Ventures的审查显示,鉴于市场即将增长,其中期收益萎缩对其高市盈率的影响并没有我们预期的那么大。目前,我们对高市盈率越来越不满意,因为这种收益表现极不可能长期支持这种积极情绪。除非最近的中期状况明显改善,否则很难接受这些价格的合理性。