The FAR International Holdings Group Company Limited (HKG:2516) share price has done very well over the last month, posting an excellent gain of 26%. 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.
Since its price has surged higher, given close to half the companies in Hong Kong have price-to-earnings ratios (or "P/E's") below 9x, you may consider FAR International Holdings Group as a stock to avoid entirely with its 14.3x 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.
FAR International Holdings Group certainly has been doing a great job lately as it's been growing earnings at a really rapid pace. 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:2516 Price to Earnings Ratio vs Industry July 16th 2024 Although there are no analyst estimates available for FAR International Holdings Group, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
Is There Enough Growth For FAR International Holdings Group?
FAR International Holdings Group's P/E ratio would be typical for a company that's expected to deliver very strong growth, and importantly, perform much better than the market.
If we review the last year of earnings growth, the company posted a terrific increase of 33%. However, this wasn't enough as the latest three year period has seen a very unpleasant 99% drop in EPS in aggregate. 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.
In light of this, it's alarming that FAR International Holdings 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. 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.
What We Can Learn From FAR International Holdings Group's P/E?
Shares in FAR International Holdings Group have built up some good momentum lately, which has really inflated its P/E. Using the price-to-earnings ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.
Our examination of FAR International Holdings 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.
And what about other risks? Every company has them, and we've spotted 3 warning signs for FAR International Holdings Group (of which 1 is concerning!) you should know about.
Of course, you might also be able to find a better stock than FAR International Holdings Group. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.
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
FAR International Holdings Group Company Limited(HKG:2516)の株価は、過去1か月間非常に良い成績を収め、26%の素晴らしい利益を投稿しています。 長期的な株主にとっては、最近のバウンス以降、株価の回復に感謝することができます。年間ほぼフラットです。
FAR International Holdings Groupは、最近非常に良い仕事をしており、非常に急速なペースで利益を成長させています。P / Eが高いのは、投資家がこの強い利益成長が近い将来に市場全体を上回る十分なものと考えているためだと考えられます。そうでない場合、既存の株主は株価の持続可能性について少し神経質になるかもしれません。
SEHK:2516 株価収益率 vs 業種 2024年7月16日FAR International Holdings Groupに対するアナリストの予測はありませんが、earnings、revenue、cash flowの面で会社の状況を見るためにこの無料のデータリッチな視覚化を参照してください。
FAR International Holdings Groupに十分な成長があるのでしょうか?
FAR International Holdings GroupのP / E比率は、非常に強い成長を提供し、さらに市場よりも遥かに優れた成績を収めることが期待される企業に典型的です。
このように、FAR International Holdings GroupのP / E比率が他の多くの企業よりも高いことは警告信号です。明らかに、企業の多くの投資家は、最近の時代よりもはるかに強気であり、どんな価格でも株式を手放したくありません。ただし、最近の利益傾向の継続は株価に大きな影響を与えるため、これらの価格が持続可能であると仮定するのは最大級の勇敢さです。
FAR International Holdings GroupのP / E比率から学べることは何でしょうか?
FAR International Holdings Groupの株価は最近勢いを増しており、P / Eが膨らんでいます。株を売却すべきかどうかを決定するために単独で株価収益率を使用することは賢明ではありませんが、企業の将来の見通しに関する実用的なガイドになります。
FAR International Holdings Groupを調べてみると、中期的な利益が縮小しており、市場予測を下回ることが大きな影響を与えていないため、高いP / E比率を予想していたほどではないことがわかりました。利益が後退し、市場予測に劣る場合、株価は下落リスクがあるため、高いP / E比率を下げることになります。中期的な利益傾向が最近の傾向と同様に続く場合、株主の投資が大きなリスクにさらされ、潜在的な投資家が過剰なプレミアムを支払うことになります。
他にどんなリスクがあるのでしょうか?どの企業にもリスクがありますが、私たちはFAR International Holdings Groupの3つの警告サインを見つけました(うち1つは懸念事項です)。
もちろん、FAR International Holdings Groupよりも優れた株式を見つけることができるかもしれません。それで、P / E比率が合理的で利益が強く成長している他の企業の無料のコレクションを参照することをお勧めします。
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。