Qijing Machinery's stock surge doesn't justify its P/E ratio due to lackluster earnings growth. Investors may be overlooking poor growth, hoping for a business turnaround. Without medium-term improvements, current prices may be unreasonable.

Qijing Machinery's decreasing ROCE trend over the past five years doesn't inspire confidence. The company's reinvestment hasn't yielded increasing returns, and the stock's total return to shareholders has been flat. It doesn't appear to have the makings of a multi-bagger.

Despite Qijing Machinery's earnings decline, its P/E ratio mirrors the market, suggesting less bearish investor sentiment. However, if earnings trends persist, the share price may drop further, making the current P/E ratio appear high. This puts shareholders' investments at risk and potential investors may be overpaying.

Despite EPS decline, share price remains resilient, hinting at other influencing factors. The modest dividend yield and three-year revenue growth rate are unlikely to be the main drivers. The divergence between the TSR and share price return is largely due to dividend payments.