Superland Group Holdings Limited (HKG:368) shareholders would be excited to see that the share price has had a great month, posting a 38% gain and recovering from prior weakness. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 24% over that time.
Even after such a large jump in price, it's still not a stretch to say that Superland Group Holdings' price-to-earnings (or "P/E") ratio of 12.3x right now seems quite "middle-of-the-road" compared to the market in Hong Kong, where the median P/E ratio is around 11x. While this might not raise any eyebrows, if the P/E ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.
For instance, Superland Group Holdings' receding earnings in recent times would have to be some food for thought. It might be that many expect the company to put the disappointing earnings performance behind them over the coming period, which has kept the P/E from falling. If not, then existing shareholders may be a little nervous about the viability of the share price.
SEHK:368 Price to Earnings Ratio vs Industry October 7th 2024 Although there are no analyst estimates available for Superland Group Holdings, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
Does Growth Match The P/E?
In order to justify its P/E ratio, Superland Group Holdings would need to produce growth that's similar to 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 58%. This means it has also seen a slide in earnings over the longer-term as EPS is down 2.8% in total over the last three years. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.
Comparing that to the market, which is predicted to deliver 22% 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 Superland Group Holdings is trading at a fairly similar P/E to 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 on the share price eventually.
The Final Word
Its shares have lifted substantially and now Superland Group Holdings' P/E is also back up to the market median. 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 Superland Group Holdings currently trades on a higher than expected P/E since its recent earnings have been in decline over the medium-term. When we see earnings heading backwards and underperforming the market forecasts, we suspect the share price is at risk of declining, sending the moderate P/E lower. Unless the recent medium-term conditions improve, it's challenging to accept these prices as being reasonable.
Before you take the next step, you should know about the 4 warning signs for Superland Group Holdings (2 make us uncomfortable!) that we have uncovered.
It's important to make sure you look for a great company, not just the first idea you come across. So take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).
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Superland Group Holdings Limited(HKG: 368)股东会很高兴看到股价表现良好,涨幅为38%,并从先前的疲软中恢复过来。不幸的是,上个月的涨幅几乎没有弥补去年的亏损,在此期间,该股仍下跌了24%。
即使在价格大幅上涨之后,与市盈率中位数约为11倍的香港市场相比,Superland Group Holdings目前12.3倍的市盈率(或 “市盈率”)似乎相当 “处于中间位置”,仍然不费吹灰之力。尽管这可能不会引起任何关注,但如果市盈率不合理,投资者可能会错过潜在的机会或无视迫在眉睫的失望。
例如,Superland Group Holdings最近收益的下降值得深思。许多人可能预计,该公司将在未来一段时间内将令人失望的收益表现抛在脑后,这阻止了市盈率的下降。如果不是,那么现有股东可能会对股价的可行性有些紧张。