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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即使在價格大幅下跌之後,Shineroad International Holdings的市盈率(或 “市盈率”)爲12.4倍,與香港市場相比,目前仍可能看起來像賣出。在香港,約有一半公司的市盈率低於9倍,甚至市盈率低於5倍也很常見。但是,僅按面值計算市盈率是不明智的,因爲可以解釋爲什麼市盈率如此之高。
舉例來說,在過去的一年中,Shineroad International Holdings的收益有所下降,這根本不理想。一種可能性是市盈率居高不下,因爲投資者認爲該公司的表現仍足以在不久的將來跑贏大盤。你真的希望如此,否則你會無緣無故地付出相當大的代價。
根據這些信息,我們發現Shineroad International Holdings的交易市盈率高於市場。看來大多數投資者都忽視了最近的糟糕增長率,並希望公司的業務前景有所好轉。只有最大膽的人才會假設這些價格是可持續的,因爲近期收益趨勢的延續最終可能會嚴重壓制股價。
Shineroad International Holdings市盈率的底線
如果不是最近的股價的話,Shineroad International Holdings的市盈率仍然具有一定的強勁實力。通常,我們的傾向是將市盈率的使用限制在確定市場對公司整體健康狀況的看法上。
我們對Shineroad International Holdings的審查顯示,鑑於市場即將增長,其中期收益萎縮對其高市盈率的影響沒有我們預期的那麼大。當我們看到收益倒退且表現低於市場預期時,我們懷疑股價有下跌的風險,導致高市盈率走低。如果最近的中期收益趨勢繼續下去,這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。
在投資之前,還有其他重要的風險因素需要考慮,我們發現了Shineroad International Holdings的3個警告信號,你應該注意這些信號。
如果您不確定Shineroad International Holdings的業務實力,爲什麼不瀏覽我們的互動式股票清單,其中列出了一些您可能錯過的其他公司,這些股票具有穩健的業務基本面。