Shineroad International Holdings Limited (HKG:1587) shares have had a horrible month, losing 26% after a relatively good period beforehand. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 38% share price drop.
Even after such a large drop in price, Shineroad International Holdings' price-to-earnings (or "P/E") ratio of 12.4x might still make it look like a 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 as high as it is.
As an illustration, earnings have deteriorated at Shineroad International Holdings over the last year, which is not ideal at all. One possibility is that the P/E is high because investors think the company will still do enough to outperform the broader market in the near future. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.
SEHK:1587 Price to Earnings Ratio vs Industry April 12th 2024 Although there are no analyst estimates available for Shineroad International Holdings, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
What Are Growth Metrics Telling Us About The High P/E?
In order to justify its P/E ratio, Shineroad International Holdings would need to produce impressive growth in excess of the market.
Retrospectively, the last year delivered a frustrating 57% decrease to the company's bottom line. This means it has also seen a slide in earnings over the longer-term as EPS is down 42% in total over the last three years. Accordingly, shareholders would have felt downbeat about the medium-term rates of earnings growth.
Comparing that to the market, which is predicted to deliver 21% growth in the next 12 months, the company's downward momentum based on recent medium-term earnings results is a sobering picture.
With this information, we find it concerning that Shineroad International Holdings is trading at a P/E higher than the market. It seems most investors are ignoring the recent poor growth rate and are hoping for a turnaround in the company's business prospects. 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 Bottom Line On Shineroad International Holdings' P/E
There's still some solid strength behind Shineroad International Holdings' P/E, if not its share price lately. 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.
Our examination of Shineroad International Holdings 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. When we see earnings heading backwards and underperforming the market forecasts, 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.
There are also other vital risk factors to consider before investing and we've discovered 3 warning signs for Shineroad International Holdings that you should be aware of.
If you're unsure about the strength of Shineroad International Holdings' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.
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即使在价格大幅下跌之后,Shineroad International Holdings的市盈率(或 “市盈率”)为12.4倍,与香港市场相比,目前仍可能看起来像卖出。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。
举例来说,在过去的一年中,Shineroad International Holdings的收益有所下降,这根本不理想。一种可能性是市盈率居高不下,因为投资者认为该公司的表现仍足以在不久的将来跑赢大盘。你真的希望如此,否则你会无缘无故地付出相当大的代价。
根据这些信息,我们发现Shineroad International Holdings的交易市盈率高于市场。看来大多数投资者都忽视了最近的糟糕增长率,并希望公司的业务前景有所好转。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。
Shineroad International Holdings市盈率的底线
如果不是最近的股价的话,Shineroad International Holdings的市盈率仍然具有一定的强劲实力。通常,我们的倾向是将市盈率的使用限制在确定市场对公司整体健康状况的看法上。
我们对Shineroad International Holdings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没有我们预期的那么大。当我们看到收益倒退且表现低于市场预期时,我们怀疑股价有下跌的风险,导致高市盈率走低。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。
在投资之前,还有其他重要的风险因素需要考虑,我们发现了Shineroad International Holdings的3个警告信号,你应该注意这些信号。
如果您不确定Shineroad International Holdings的业务实力,为什么不浏览我们的互动式股票清单,其中列出了一些您可能错过的其他公司,这些股票具有稳健的业务基本面。