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.
过去一个月,SANVO Fine Chemicals Group Limited (HKG:301)的股价表现非常糟糕,下跌了28%。那些在过去一年里一直持股的股东现在已经损失了38%的股价。
尽管价格大幅下跌,SANVO Fine Chemicals Group的市盈率为58.2倍,与香港市场相比仍然可能被视为强力抛售。香港约一半的公司市盈率低于8倍,甚至低于5倍的市盈率很常见。然而,仅仅从市盈率本身来看并不明智,因为可能存在导致市盈率偏高的原因。
近期对SANVO Fine Chemicals Group来说非常有利,因为其收益增长迅猛。市盈率可能偏高,是因为投资者认为这种强劲的收益增长足以在不久的将来胜过整个市场。如果不是这样,那么现有股东可能对股价的可持续性有些担忧。
SEHK:301市盈率与行业指数对比 2024年8月23日 我们没有分析师的预测,但您可以通过查看我们关于SANVO Fine Chemicals Group的收益、营业收入和现金流的免费报告,了解最近的趋势如何为公司的未来做好准备。
SANVO Fine Chemicals Group的增长趋势如何?
为了证明其市盈率,SANVO Fine Chemicals Group需要产生远远超过市场的杰出增长。
鉴此,令人担忧的是,SANVO Fine Chemicals Group的市盈率高于大多数其他公司。显然,该公司的许多投资者比最近时期更看好,并不愿意以任何价格放弃他们的股票。如果市盈率下降到与最近的负增长率更加接近的水平,现有股东很有可能会为未来的失望做准备。
重要提示
SANVO Fine Chemicals Group的股票可能已经回落,但其市盈率仍然飙升。有人认为市盈率是某些行业内价值的次要衡量标准,但它可以是一个强有力的业务情绪指标。
我们对SANVO Fine Chemicals Group的研究表明,中期收益的萎缩并没有像我们预测的那样对其高市盈率产生太大影响,市场增长前景仍然看好。当我们看到盈利下滑并且表现不如市场预期时,我们怀疑股价可能会下跌,从而推动高市盈率降低。如果最近中期收益的趋势持续下去,将会给股东的投资带来重大风险,并使潜在投资者付出过高溢价的危险。
不要忘记可能存在其他风险。例如,我们已经发现了SANVO Fine Chemicals Group的3个警示信号(其中有2个可能是严重的),您应该予以关注。
您可能会找到比SANVO Fine Chemicals Group更好的投资。如果您想选择一些可能的候选公司,请查看这个免费的以低市盈率交易的有趣公司列表(但已经证明他们能够增长收益)。