Sichuan Qiaoyuan Gas Co.,Ltd (SZSE:301286) shares have had a really impressive month, gaining 29% after a shaky period beforehand. Longer-term shareholders would be thankful for the recovery in the share price since it's now virtually flat for the year after the recent bounce.
After such a large jump in price, given close to half the companies in China have price-to-earnings ratios (or "P/E's") below 34x, you may consider Sichuan Qiaoyuan GasLtd as a stock to avoid entirely with its 68x P/E ratio. 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.
For instance, Sichuan Qiaoyuan GasLtd's receding earnings in recent times would have to be some food for thought. 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.
Check out our latest analysis for Sichuan Qiaoyuan GasLtd
SZSE:301286 Price Based on Past Earnings November 8th 2022 Although there are no analyst estimates available for Sichuan Qiaoyuan GasLtd, take a look at this
free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
How Is Sichuan Qiaoyuan GasLtd's Growth Trending?
The only time you'd be truly comfortable seeing a P/E as steep as Sichuan Qiaoyuan GasLtd's is when the company's growth is on track to outshine the market decidedly.
Retrospectively, the last year delivered a frustrating 35% decrease to the company's bottom line. The last three years don't look nice either as the company has shrunk EPS by 56% in aggregate. Accordingly, shareholders would have felt downbeat about the medium-term rates of earnings growth.
In contrast to the company, the rest of the market is expected to grow by 45% over the next year, which really puts the company's recent medium-term earnings decline into perspective.
With this information, we find it concerning that Sichuan Qiaoyuan GasLtd 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. There's a very good chance existing shareholders are setting themselves up for future disappointment if the P/E falls to levels more in line with the recent negative growth rates.
The Final Word
Shares in Sichuan Qiaoyuan GasLtd have built up some good momentum lately, which has really inflated its P/E. It's argued the price-to-earnings ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.
Our examination of Sichuan Qiaoyuan GasLtd 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.
Plus, you should also learn about these 2 warning signs we've spotted with Sichuan Qiaoyuan GasLtd (including 1 which is a bit unpleasant).
You might be able to find a better investment than Sichuan Qiaoyuan GasLtd. 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.
四川僑源燃氣有限責任公司(SZSE：301286)在經歷了一段不穩定的時期後，股票經歷了令人印象深刻的一個月，上漲了29%。較長期的股東將對股價的回升感到欣慰，因為在最近的反彈之後，股價在一年內幾乎持平。
在股價大幅上漲後，考慮到中國近一半的公司的市盈率(或“市盈率”)低於34倍，你可能會認為四川僑源燃氣有限公司是一隻完全避免68倍市盈率的股票。然而，僅僅從表面上看待市盈率是不明智的，因為可能會有一個解釋，為什麼它如此之高。
例如，四川僑源燃氣股份有限公司近期收益下滑，這肯定值得深思。一種可能性是，市盈率很高，因為投資者認為該公司在不久的將來仍將採取足夠的措施來跑贏大盤。你真的希望如此，否則你會無緣無故地付出相當大的代價。
查看我們對四川僑源燃氣有限公司的最新分析
SZSE：301286基於過去收益的價格2022年11月8日儘管沒有分析師對四川僑源天然氣有限公司的估計，但看看這個
免費豐富的數據可視化，看看公司的收益、收入和現金流是如何堆積的。
四川僑源燃氣發展趨勢如何？
只有當四川僑源天然氣股份有限公司的市盈率如此之高時，你才會真正放心地看到它的市盈率，那就是該公司的增長將明顯超過市場。
回顧過去一年，該公司的利潤令人沮喪地下降了35%。過去三年的情況也不妙，該公司每股收益總計縮水了56%。因此，股東們會對中期盈利增長率感到悲觀。
與該公司形成鮮明對比的是，該市場的其他部分預計明年將增長45%，這確實讓人對該公司最近中期收益的下降有了正確的認識。
有了這些信息，我們發現四川僑源天然氣有限公司的市盈率高於市場。似乎大多數投資者都忽視了最近糟糕的增長率，並希望該公司的業務前景有所好轉。如果市盈率下降到與最近負增長更一致的水平，現有股東很有可能會讓自己未來感到失望。
最後的結論
四川僑源燃氣股份有限公司的股票最近出現了一些良好的勢頭，這確實抬高了其市盈率。有人認為，在某些行業中，市盈率是衡量價值的次要指標，但它可以成為一個強大的商業信心指標。
我們對四川僑源天然氣有限公司的調查顯示，考慮到市場的增長，該公司中期收益的縮水對其高市盈率的影響並不像我們預期的那樣大。當我們看到盈利出現倒退，表現遜於市場預期時，我們懷疑股價有下跌的風險，導致高市盈率走低。如果近期的中期盈利趨勢持續下去，將使股東的投資面臨重大風險，潛在投資者面臨支付過高溢價的危險。
另外，你還應該瞭解這些我們在四川僑源燃氣有限公司發現了2個警告信號(包括1，這有點令人不快)。
你也許能找到比四川僑源燃氣股份有限公司更好的投資。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)。
對這篇文章有什麼反饋嗎？擔心內容嗎？ 保持聯繫直接與我們聯繫。或者，也可以給編輯組發電子郵件，地址是implywallst.com。
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。
