With a median price-to-earnings (or "P/E") ratio of close to 9x in Hong Kong, you could be forgiven for feeling indifferent about Hengan International Group Company Limited's (HKG:1044) P/E ratio of 9.4x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/E.
With earnings growth that's superior to most other companies of late, Hengan International Group has been doing relatively well. One possibility is that the P/E is moderate because investors think this strong earnings performance might be about to tail off. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.
SEHK:1044 Price to Earnings Ratio vs Industry April 15th 2024 If you'd like to see what analysts are forecasting going forward, you should check out our free report on Hengan International Group.
What Are Growth Metrics Telling Us About The P/E?
The only time you'd be comfortable seeing a P/E like Hengan International Group's is when the company's growth is tracking the market closely.
If we review the last year of earnings growth, the company posted a terrific increase of 46%. Still, incredibly EPS has fallen 38% in total from three years ago, which is quite disappointing. So unfortunately, we have to acknowledge that the company has not done a great job of growing earnings over that time.
Shifting to the future, estimates from the analysts covering the company suggest earnings should grow by 6.6% each year over the next three years. That's shaping up to be materially lower than the 15% per annum growth forecast for the broader market.
With this information, we find it interesting that Hengan International Group is trading at a fairly similar P/E to the market. It seems most investors are ignoring the fairly limited growth expectations and are willing to pay up for exposure to the stock. Maintaining these prices will be difficult to achieve as this level of earnings growth is likely to weigh down the shares eventually.
The Final Word
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.
We've established that Hengan International Group currently trades on a higher than expected P/E since its forecast growth is lower than the wider market. Right now we are uncomfortable with the P/E as the predicted future earnings aren't likely to support a more positive sentiment for long. This places shareholders' investments at risk and potential investors in danger of paying an unnecessary premium.
Having said that, be aware Hengan International Group is showing 1 warning sign in our investment analysis, you should know about.
If these risks are making you reconsider your opinion on Hengan International Group, explore our interactive list of high quality stocks to get an idea of what else is out there.
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.
香港では、メディアンのP / E比率が約9倍であるため、Hengan International Group Company Limited(HKG:1044)のP / E比率が9.4倍であっても無関心の気持ちになっても許されます。しかしながら、投資家はP / Eに合理的な根拠がない場合、明確な機会または潜在的な打撃を見逃している可能性があります。
最近のほとんどの他の企業よりも優れた収益成長を実現しているHengan International Groupは、比較的良好な成績を収めています。P / Eが適度である理由の1つは、投資家がこの強力な利益成長がこれから減速する可能性があると考えているためです。もしこのような場合であれば、投資家は、投資が人気になっていない間に株を購入することができる可能性があるので、会社が好きである場合は、そうであって欲しいと考えるでしょう。
SEHK:1044株価と業種のP / E比率4月15日2024年分析家が今後予測していることを知りたい場合は、Hengan International Groupに関する無料レポートをチェックする必要があります。
成長指標がP/Eについて何を言っているか?
Hengan International GroupのP / Eのような場合は、会社の成長が市場を追跡している場合に限られます。
これらの情報を元に判断すると、Hengan International Groupは比較的似たようなP / Eで取引されていることが興味深いと思われます。このような利益成長の制限がある場合、投資家のほとんどが、株式への露出への支払いをすることに前向きであり、これらの価格を維持することは、株式価格を最終的に重く圧迫することになります。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。