When close to half the companies in China have price-to-earnings ratios (or "P/E's") below 28x, you may consider Foshan Golden Milky Way Intelligent Equipment Co., Ltd. (SZSE:300619) as a stock to avoid entirely with its 56.3x P/E ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/E.
For instance, Foshan Golden Milky Way Intelligent Equipment's receding earnings in recent times would have to be some food for thought. It might be that many expect the company to still outplay most other companies over the coming period, which has kept the P/E from collapsing. If not, then existing shareholders may be quite nervous about the viability of the share price.
SZSE:300619 Price to Earnings Ratio vs Industry June 26th 2024 Although there are no analyst estimates available for Foshan Golden Milky Way Intelligent Equipment, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
How Is Foshan Golden Milky Way Intelligent Equipment's Growth Trending?
The only time you'd be truly comfortable seeing a P/E as steep as Foshan Golden Milky Way Intelligent Equipment's is when the company's growth is on track to outshine the market decidedly.
Retrospectively, the last year delivered a frustrating 43% decrease to the company's bottom line. However, a few very strong years before that means that it was still able to grow EPS by an impressive 120% in total over the last three years. Accordingly, while they would have preferred to keep the run going, shareholders would probably welcome the medium-term rates of earnings growth.
Weighing that recent medium-term earnings trajectory against the broader market's one-year forecast for expansion of 36% shows it's noticeably less attractive on an annualised basis.
With this information, we find it concerning that Foshan Golden Milky Way Intelligent Equipment is trading at a P/E higher than the market. It seems most investors are ignoring the fairly limited recent growth rates and are hoping for a turnaround in the company's business prospects. There's a good chance existing shareholders are setting themselves up for future disappointment if the P/E falls to levels more in line with recent growth rates.
The Final Word
While the price-to-earnings ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of earnings expectations.
We've established that Foshan Golden Milky Way Intelligent Equipment currently trades on a much higher than expected P/E since its recent three-year growth is lower than the wider market forecast. When we see weak earnings with slower than market growth, we suspect the share price is at risk of declining, sending the high P/E lower. Unless the recent medium-term conditions improve markedly, it's very challenging to accept these prices as being reasonable.
And what about other risks? Every company has them, and we've spotted 6 warning signs for Foshan Golden Milky Way Intelligent Equipment (of which 2 are a bit concerning!) you should know about.
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).
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
在中國約有一半的公司市盈率(或“P/E”)低於28倍時,您可以考慮避免購買創業板股票Foshan Golden Milky Way Intelligent Equipment Co.,Ltd.(SZSE:300619),因爲它的市盈率爲56.3倍。儘管如此,我們需要深入挖掘,以確定高市盈率是否有合理的基礎。
例如,最近Foshan Golden Milky Way Intelligent Equipment的營業收入不斷下滑,這是一些值得思考的問題。可能是因爲很多人期望該公司在未來的一段時間內表現仍會超過大部分公司,這使得市盈率不會崩潰。如果不是這樣,那麼現有股東可能會對股價的可行性感到相當緊張。
SZSE:300619市盈率與行業板塊2024年6月26日雖然目前沒有關於Foshan Golden Milky Way Intelligent Equipment的分析師預估,但可以查看這個免費的數據可視化來了解該公司在收益、營業收入和現金流方面的情況。
Foshan Golden Milky Way Intelligent Equipment的成長態勢如何? 在公司增長有望顯著超過市場時,您唯一會真正放心看到市盈率像金銀河這樣高的時候。
只有Foshan Golden Milky Way Intelligent Equipment的增長有望明顯超過市場時,您才會真正放心看到像它這樣陡峭的市盈率。
回顧一下,最近一年Foshan Golden Milky Way Intelligent Equipment的淨利潤下降了令人沮喪的43%。不過,在此之前的幾年中表現得非常出色,這意味着過去三年中它仍然能夠總體上實現每股收益增長120%。因此,雖然他們希望保持增長,但股東們可能會歡迎中期的收益增長率。
將公司最近的中期收益軌跡與市場更廣泛的一年預計擴張36%進行比較,發現其年化基礎上顯然不太吸引人。
根據這些信息,我們發現Foshan Golden Milky Way Intelligent Equipment的市盈率高於市場,這讓我們感到擔憂。似乎大多數投資者都忽略了近期有限的增長率,而是希望公司業務前景好轉。如果市盈率降至與近期增長率相一致的水平,現有股東很有可能讓自己面臨未來的失望。
最終結論
雖然市盈率不應是您是否購買股票的決定性因素,但它是企業盈利預期的比較良好的指標。
我們已經確定,由於其近三年的增長低於市場預測,Foshan Golden Milky Way Intelligent Equipment目前的市盈率遠高於預期。當我們看到收益疲軟且增長低於市場時,我們懷疑股價面臨下降風險,市盈率會跌至更接近近期增長率的水平。除非最近的中期情況出現顯著改善,否則很難接受這些價格是合理的。
那麼其他風險呢?每個公司都有,我們已經發現了Foshan Golden Milky Way Intelligent Equipment的6個警報(其中有2個有點令人擔憂!)您應該知道。