Theme International Holdings Limited (HKG:990) shareholders would be excited to see that the share price has had a great month, posting a 55% gain and recovering from prior weakness. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 27% in the last twelve months.
Although its price has surged higher, you could still be forgiven for feeling indifferent about Theme International Holdings' P/E ratio of 7x, since the median price-to-earnings (or "P/E") ratio in Hong Kong is also close to 9x. Although, it's not wise to simply ignore the P/E without explanation as investors may be disregarding a distinct opportunity or a costly mistake.
We'd have to say that with no tangible growth over the last year, Theme International Holdings' earnings have been unimpressive. It might be that many expect the uninspiring earnings performance to only match most other companies at best over the coming period, which has kept the P/E from rising. If not, then existing shareholders may be feeling hopeful about the future direction of the share price.
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 Theme International Holdings' earnings, revenue and cash flow.
What Are Growth Metrics Telling Us About The P/E?
In order to justify its P/E ratio, Theme International Holdings would need to produce growth that's similar to the market.
Taking a look back first, we see that there was hardly any earnings per share growth to speak of for the company over the past year. However, a few strong years before that means that it was still able to grow EPS by an impressive 137% in total over the last three years. Accordingly, shareholders would have probably welcomed those medium-term rates of earnings growth.
Weighing that recent medium-term earnings trajectory against the broader market's one-year forecast for expansion of 21% shows it's noticeably more attractive on an annualised basis.
With this information, we find it interesting that Theme International Holdings is trading at a fairly similar P/E to the market. It may be that most investors are not convinced the company can maintain its recent growth rates.
The Final Word
Theme International Holdings appears to be back in favour with a solid price jump getting its P/E back in line with most other companies. 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 Theme International Holdings revealed its three-year earnings trends aren't contributing to its P/E as much as we would have predicted, given they look better than current market expectations. There could be some unobserved threats to earnings preventing the P/E ratio from matching this positive performance. At least the risk of a price drop looks to be subdued if recent medium-term earnings trends continue, but investors seem to think future earnings could see some volatility.
A lot of potential risks can sit within a company's balance sheet. Take a look at our free balance sheet analysis for Theme International Holdings with six simple checks on some of these key factors.
You might be able to find a better investment than Theme International Holdings. 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).
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有了这些信息,我们发现有趣的是,Theme International Holdings的交易市盈率与市场相当相似。可能是大多数投资者不相信该公司能够维持其最近的增长率。
最后一句话
Theme International Holdings似乎重新受到青睐,股价稳步上涨,市盈率恢复了与大多数其他公司持平。仅使用市盈率来确定是否应该出售股票是不明智的,但它可以作为公司未来前景的实用指南。
我们对Theme International Holdings的审查显示,其三年收益趋势对市盈率的贡献没有我们预期的那么大,因为这些趋势看起来好于当前的市场预期。可能存在一些未观察到的收益威胁,使市盈率无法与这种积极表现相提并论。如果最近的中期收益趋势持续下去,至少价格下跌的风险似乎有所减弱,但投资者似乎认为未来的收益可能会出现一些波动。
公司的资产负债表中可能存在许多潜在风险。看看我们对Theme International Holdings的免费资产负债表分析,对其中一些关键因素进行了六次简单检查。