Q P Group Holdings Limited (HKG:1412) shareholders won't be pleased to see that the share price has had a very rough month, dropping 44% and undoing the prior period's positive performance. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 23% share price drop.
Although its price has dipped substantially, Q P Group Holdings may still be sending bullish signals at the moment with its price-to-earnings (or "P/E") ratio of 7.1x, since almost half of all companies in Hong Kong have P/E ratios greater than 10x and even P/E's higher than 20x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/E.
For example, consider that Q P Group Holdings' financial performance has been poor lately as its earnings have been in decline. It might be that many expect the disappointing earnings performance to continue or accelerate, which has repressed the P/E. However, if this doesn't eventuate then existing shareholders may be feeling optimistic 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 Q P Group Holdings' earnings, revenue and cash flow.
Does Growth Match The Low P/E?
Q P Group Holdings' P/E ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the market.
Taking a look back first, the company's earnings per share growth last year wasn't something to get excited about as it posted a disappointing decline of 37%. The last three years don't look nice either as the company has shrunk EPS by 39% in aggregate. So unfortunately, we have to acknowledge that the company has not done a great job of growing earnings over that time.
Weighing that medium-term earnings trajectory against the broader market's one-year forecast for expansion of 21% shows it's an unpleasant look.
In light of this, it's understandable that Q P Group Holdings' P/E would sit below the majority of other companies. However, we think shrinking earnings are unlikely to lead to a stable P/E over the longer term, which could set up shareholders for future disappointment. Even just maintaining these prices could be difficult to achieve as recent earnings trends are already weighing down the shares.
What We Can Learn From Q P Group Holdings' P/E?
Q P Group Holdings' recently weak share price has pulled its P/E below 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.
We've established that Q P Group Holdings maintains its low P/E on the weakness of its sliding earnings over the medium-term, as expected. At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio. If recent medium-term earnings trends continue, it's hard to see the share price moving strongly in either direction in the near future under these circumstances.
Before you settle on your opinion, we've discovered 3 warning signs for Q P Group Holdings (1 is a bit concerning!) that you should be aware of.
Of course, you might also be able to find a better stock than Q P Group Holdings. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.
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.
Q P 集团控股有限公司(HKG: 1412)股东不会高兴地看到,股价经历了一个非常艰难的月份,下跌了44%,抵消了前一时期的积极表现。在过去十二个月中已经持股的股东没有获得回报,反而坐视股价下跌了23%。
尽管其价格已大幅下跌,但Q P Group Holdings目前可能仍在发出看涨信号,其市盈率(或 “市盈率”)为7.1倍,因为几乎一半的香港公司的市盈率大于10倍,甚至市盈率高于20倍也并不罕见。尽管如此,我们需要更深入地挖掘以确定降低市盈率是否有合理的基础。
例如,考虑一下由于收益下降,Q P Group Holdings的财务表现不佳。许多人可能预计,令人失望的收益表现将持续或加速,这抑制了市盈率。但是,如果最终没有出现这种情况,那么现有股东可能会对股价的未来走向感到乐观。
我们没有分析师的预测,但您可以查看我们关于Q P Group Holdings收益、收入和现金流的免费报告,了解最近的趋势如何为公司未来做好准备。
增长与低市盈率相匹配吗?
Q P Group Holdings的市盈率对于一家预计增长有限,而且重要的是表现不如市场的公司来说是典型的。