When close to half the companies in Hong Kong have price-to-earnings ratios (or "P/E's") above 10x, you may consider Far East Horizon Limited (HKG:3360) as a highly attractive investment with its 4.2x P/E ratio. However, the P/E might be quite low for a reason and it requires further investigation to determine if it's justified.
Far East Horizon could be doing better as its earnings have been going backwards lately while most other companies have been seeing positive earnings growth. The P/E is probably low because investors think this poor earnings performance isn't going to get any better. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.
SEHK:3360 Price to Earnings Ratio vs Industry November 20th 2024 Keen to find out how analysts think Far East Horizon's future stacks up against the industry? In that case, our free report is a great place to start.
How Is Far East Horizon's Growth Trending?
There's an inherent assumption that a company should far underperform the market for P/E ratios like Far East Horizon's to be considered reasonable.
Retrospectively, the last year delivered a frustrating 19% decrease to the company's bottom line. The last three years don't look nice either as the company has shrunk EPS by 7.3% in aggregate. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.
Turning to the outlook, the next three years should generate growth of 5.7% each year as estimated by the nine analysts watching the company. Meanwhile, the rest of the market is forecast to expand by 12% each year, which is noticeably more attractive.
With this information, we can see why Far East Horizon is trading at a P/E lower than the market. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.
The Bottom Line On Far East Horizon's P/E
While the price-to-earnings ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of earnings expectations.
As we suspected, our examination of Far East Horizon's analyst forecasts revealed that its inferior earnings outlook is contributing to its low P/E. Right now shareholders are accepting the low P/E as they concede future earnings probably won't provide any pleasant surprises. It's hard to see the share price rising strongly in the near future under these circumstances.
There are also other vital risk factors to consider before investing and we've discovered 1 warning sign for Far East Horizon that you should be aware of.
It's important to make sure you look for a great company, not just the first idea you come across. So take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).
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.
香港の企業のほぼ半数がPER(価格収益率)が10倍以上であるとき、Far East Horizon Limited (HKG:3360) の4.2倍のPERは非常に魅力的な投資先と考えられるかもしれません。しかし、このPERがかなり低いのには理由があるかもしれず、それが正当化されているかどうかを判断するためにさらなる調査が必要です。
Far East Horizonは最近、利益が減少しているため、他の多くの企業がポジティブな利益成長を見ている中で、より良い成果を上げることができていない可能性があります。このPERは、おそらく投資家がこの低迷した利益パフォーマンスが改善されないと考えているため低いのです。もしそうであれば、既存の株主はおそらく株価の将来の方向性に対して興奮を感じるのが難しいでしょう。
SEHK:3360 価格収益率と業種 2024年11月20日 アナリストがFar East Horizonの将来が業種とどう比較されるかをどう考えているかを知りたいですか?その場合、私たちの無料レポートはスタートするのに素晴らしい場所です。
Far East Horizonの成長はどのように推移していますか?
Far East HorizonのようなPERを持つ企業が合理的と見なされるためには、市場に比べて大きくアンダーパフォームするという前提があります。
我々が疑っていたように、Far East Horizonのアナリスト予測の調査から、その劣った収益見通しが低PERの要因になっていることが明らかになりました。
現時点で株主たちは、低PERを受け入れており、将来の収益が良い驚きをもたらすことはないだろうと認めているのです。
このような状況の下では、株価が近い将来に強く上昇することは難しいでしょう。
投資する前に考慮すべき他の重要なリスク要因もあり、Far East Horizonについて知っておくべき1つの警告サインを発見しました。
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。