The SANVO Fine Chemicals Group Limited (HKG:301) share price has fared very poorly over the last month, falling by a substantial 28%. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 38% share price drop.
Although its price has dipped substantially, SANVO Fine Chemicals Group's price-to-earnings (or "P/E") ratio of 58.2x might still make it look like a strong sell right now compared to the market in Hong Kong, where around half of the companies have P/E ratios below 8x 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 so lofty.
Recent times have been quite advantageous for SANVO Fine Chemicals Group as its earnings have been rising very briskly. The P/E is probably high because investors think this strong earnings growth will be enough to outperform the broader market in the near future. If not, then existing shareholders might be a little nervous about the viability of the share price.
SEHK:301 Price to Earnings Ratio vs Industry August 23rd 2024 We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on SANVO Fine Chemicals Group's earnings, revenue and cash flow.
How Is SANVO Fine Chemicals Group's Growth Trending?
In order to justify its P/E ratio, SANVO Fine Chemicals Group would need to produce outstanding growth well in excess of the market.
Taking a look back first, we see that the company grew earnings per share by an impressive 38% last year. However, this wasn't enough as the latest three year period has seen a very unpleasant 91% drop in EPS in aggregate. Accordingly, shareholders would have felt downbeat about the medium-term rates of earnings growth.
Weighing that medium-term earnings trajectory against the broader market's one-year forecast for expansion of 19% shows it's an unpleasant look.
In light of this, it's alarming that SANVO Fine Chemicals Group's P/E sits above the majority of other companies. Apparently many investors in the company are way more bullish than recent times would indicate and aren't willing to let go of their stock at any price. 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 Key Takeaway
SANVO Fine Chemicals Group's shares may have retreated, but its P/E is still flying high. 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 SANVO Fine Chemicals Group 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.
Don't forget that there may be other risks. For instance, we've identified 3 warning signs for SANVO Fine Chemicals Group (2 are potentially serious) you should be aware of.
You might be able to find a better investment than SANVO Fine Chemicals Group. If you want a selection of possible candidates, check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).
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.
過去一個月,SANVO Fine Chemicals Group Limited (HKG:301)的股價表現非常糟糕,下跌了28%。那些在過去一年裏一直持股的股東現在已經損失了38%的股價。
儘管價格大幅下跌,SANVO Fine Chemicals Group的市盈率爲58.2倍,與香港市場相比仍然可能被視爲強力拋售。香港約一半的公司市盈率低於8倍,甚至低於5倍的市盈率很常見。然而,僅僅從市盈率本身來看並不明智,因爲可能存在導致市盈率偏高的原因。
近期對SANVO Fine Chemicals Group來說非常有利,因爲其收益增長迅猛。市盈率可能偏高,是因爲投資者認爲這種強勁的收益增長足以在不久的將來勝過整個市場。如果不是這樣,那麼現有股東可能對股價的可持續性有些擔憂。
SEHK:301市盈率與行業指數對比 2024年8月23日 我們沒有分析師的預測,但您可以通過查看我們關於SANVO Fine Chemicals Group的收益、營業收入和現金流的免費報告,了解最近的趨勢如何爲公司的未來做好準備。
SANVO Fine Chemicals Group的增長趨勢如何?
爲了證明其市盈率,SANVO Fine Chemicals Group需要產生遠遠超過市場的傑出增長。
鑑此,令人擔憂的是,SANVO Fine Chemicals Group的市盈率高於大多數其他公司。顯然,該公司的許多投資者比最近時期更看好,並不願意以任何價格放棄他們的股票。如果市盈率下降到與最近的負增長率更加接近的水平,現有股東很有可能會爲未來的失望做準備。
重要提示
SANVO Fine Chemicals Group的股票可能已經回落,但其市盈率仍然飆升。有人認爲市盈率是某些行業內價值的次要衡量標準,但它可以是一個強有力的業務情緒指標。
我們對SANVO Fine Chemicals Group的研究表明,中期收益的萎縮並沒有像我們預測的那樣對其高市盈率產生太大影響,市場增長前景仍然看好。當我們看到盈利下滑並且表現不如市場預期時,我們懷疑股價可能會下跌,從而推動高市盈率降低。如果最近中期收益的趨勢持續下去,將會給股東的投資帶來重大風險,並使潛在投資者付出過高溢價的危險。
不要忘記可能存在其他風險。例如,我們已經發現了SANVO Fine Chemicals Group的3個警示信號(其中有2個可能是嚴重的),您應該予以關注。
您可能會找到比SANVO Fine Chemicals Group更好的投資。如果您想選擇一些可能的候選公司,請查看這個免費的以低市盈率交易的有趣公司列表(但已經證明他們能夠增長收益)。