The Jiangsu Ankura Smart Transmission Engineering Technology Co.Ltd (SZSE:300617) share price has fared very poorly over the last month, falling by a substantial 26%. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 42% share price drop.
Even after such a large drop in price, given about half the companies in China have price-to-earnings ratios (or "P/E's") above 27x, you may still consider Jiangsu Ankura Smart Transmission Engineering TechnologyLtd as an attractive investment with its 21.5x P/E ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/E.
With earnings that are retreating more than the market's of late, Jiangsu Ankura Smart Transmission Engineering TechnologyLtd has been very sluggish. It seems that many are expecting the dismal earnings performance to persist, which has repressed the P/E. You'd much rather the company wasn't bleeding earnings if you still believe in the business. If not, then existing shareholders will probably struggle to get excited about the future direction of the share price.
SZSE:300617 Price to Earnings Ratio vs Industry February 5th 2024 Want the full picture on analyst estimates for the company? Then our free report on Jiangsu Ankura Smart Transmission Engineering TechnologyLtd will help you uncover what's on the horizon.
Is There Any Growth For Jiangsu Ankura Smart Transmission Engineering TechnologyLtd?
Jiangsu Ankura Smart Transmission Engineering TechnologyLtd's P/E ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the market.
If we review the last year of earnings, dishearteningly the company's profits fell to the tune of 11%. As a result, earnings from three years ago have also fallen 4.7% overall. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.
Looking ahead now, EPS is anticipated to climb by 103% during the coming year according to the two analysts following the company. Meanwhile, the rest of the market is forecast to only expand by 41%, which is noticeably less attractive.
In light of this, it's peculiar that Jiangsu Ankura Smart Transmission Engineering TechnologyLtd's P/E sits below the majority of other companies. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.
The Final Word
Jiangsu Ankura Smart Transmission Engineering TechnologyLtd's P/E has taken a tumble along with its share price. 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 Jiangsu Ankura Smart Transmission Engineering TechnologyLtd's analyst forecasts revealed that its superior earnings outlook isn't contributing to its P/E anywhere near as much as we would have predicted. There could be some major unobserved threats to earnings preventing the P/E ratio from matching the positive outlook. It appears many are indeed anticipating earnings instability, because these conditions should normally provide a boost to the share price.
You always need to take note of risks, for example - Jiangsu Ankura Smart Transmission Engineering TechnologyLtd has 1 warning sign we think you should be aware of.
If you're unsure about the strength of Jiangsu Ankura Smart Transmission Engineering TechnologyLtd's 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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