Jiangsu Sunshine Co., Ltd. (SHSE:600220) shares have had a horrible month, losing 27% after a relatively good period beforehand. Looking back over the past twelve months the stock has been a solid performer regardless, with a gain of 11%.
Although its price has dipped substantially, you could still be forgiven for feeling indifferent about Jiangsu Sunshine's P/E ratio of 30.8x, since the median price-to-earnings (or "P/E") ratio in China is also close to 32x. 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.
Recent times have been quite advantageous for Jiangsu Sunshine as its earnings have been rising very briskly. The P/E is probably moderate because investors think this strong earnings growth might not be enough to outperform the broader market in the near future. If that doesn't eventuate, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.
See our latest analysis for Jiangsu Sunshine
SHSE:600220 Price Based on Past Earnings September 19th 2022 Want the full picture on earnings, revenue and cash flow for the company? Then our
free report on Jiangsu Sunshine will help you shine a light on its historical performance.
Is There Some Growth For Jiangsu Sunshine?
Jiangsu Sunshine's P/E ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the market.
If we review the last year of earnings growth, the company posted a terrific increase of 198%. As a result, it also grew EPS by 19% in total over the last three years. Therefore, it's fair to say the earnings growth recently has been respectable for the company.
Weighing that recent medium-term earnings trajectory against the broader market's one-year forecast for expansion of 41% shows it's noticeably less attractive on an annualised basis.
With this information, we find it interesting that Jiangsu Sunshine is trading at a fairly similar P/E to the market. It seems most investors are ignoring the fairly limited recent growth rates and are willing to pay up for exposure to the stock. They may be setting themselves up for future disappointment if the P/E falls to levels more in line with recent growth rates.
The Key Takeaway
With its share price falling into a hole, the P/E for Jiangsu Sunshine looks quite average now. 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.
Our examination of Jiangsu Sunshine revealed its three-year earnings trends aren't impacting its P/E as much as we would have predicted, given they look worse than current market expectations. Right now we are uncomfortable with the P/E as this earnings performance isn't likely to support a more positive sentiment for long. If recent medium-term earnings trends continue, it will place shareholders' investments at risk and potential investors in danger of paying an unnecessary premium.
It's always necessary to consider the ever-present spectre of investment risk. We've identified 5 warning signs with Jiangsu Sunshine (at least 2 which don't sit too well with us), and understanding these should be part of your investment process.
You might be able to find a better investment than Jiangsu Sunshine. If you want a selection of possible candidates, check out this free list of interesting companies that trade on a P/E below 20x (but have proven they can grow earnings).
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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.
江蘇陽光股份有限公司。(上海證券交易所:600220)股票經歷了一個糟糕的月份,在經歷了一段相對較好的時期後,下跌了27%。回顧過去12個月,該股表現穩健,漲幅達11%。
儘管江蘇陽光的股價大幅下跌,但你對江蘇陽光30.8倍的市盈率無動於衷也是情有可原的,因為中國的市盈率中值也接近32倍。儘管這可能不會令人驚訝,但如果市盈率不合理,投資者可能會錯過潛在的機會,或者忽視迫在眉睫的失望。
最近一段時間對江蘇陽光來説相當有利,因為它的收益一直在快速增長。市盈率可能是温和的,因為投資者認為這種強勁的收益增長可能不足以在不久的將來跑贏大盤。如果不能實現這一點,那麼現有股東有理由對股價的未來走勢感到樂觀。
查看我們對江蘇陽光的最新分析
上海證交所:600220基於過去收益的價格2022年9月19日想要了解公司的收益、收入和現金流的全貌嗎?那麼我們的
免費江蘇陽光的報道將幫助您瞭解它的歷史表現。
江蘇陽光有增長嗎?
對於一家預計只會實現温和增長,而且重要的是表現與市場一致的公司來説,江蘇陽光的市盈率將是典型的。
如果我們回顧過去一年的收益增長,該公司公佈了198%的驚人增長。因此,在過去三年中,它的每股收益總共增長了19%。因此,公平地説,最近的收益增長對公司來説是可敬的。
將最近的中期收益軌跡與大盤一年增長41%的預測進行比較,結果顯示,按年率計算,它的吸引力明顯下降。
有了這些信息,我們發現有趣的是,江蘇陽光的市盈率與市場相當接近。似乎大多數投資者都忽視了最近相當有限的增長率,並願意為股票敞口支付高價。如果市盈率下降到與最近的增長率更接近的水平,他們可能會讓自己在未來感到失望。
關鍵的外賣
隨着股價跌入低谷,江蘇陽光目前的市盈率看起來相當平均。我們會説,市盈率的力量主要不是作為一種估值工具,而是衡量當前投資者的情緒和未來預期。
我們對江蘇陽光的調查顯示,其三年盈利趨勢對市盈率的影響並不像我們預期的那麼大,因為它們看起來比目前的市場預期更糟糕。目前,我們對市盈率感到不安,因為這種盈利表現不太可能在很長時間內支持更積極的情緒。如果近期的中期盈利趨勢持續下去,將使股東的投資面臨風險,潛在投資者面臨支付不必要溢價的危險。
總是有必要考慮到投資風險的幽靈無處不在。我們已經確定了江蘇陽光的5個預警信號(至少有兩個不太適合我們),瞭解這些應該是你投資過程的一部分。
你也許能找到比江蘇陽光更好的投資。如果您想要選擇可能的候選人,請查看以下內容免費令人感興趣的市盈率低於20倍的公司名單(但已證明它們可以增加收益)。
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本文由Simply Wall St.撰寫,具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。