Touchstone International Medical Science Co., Ltd. (SHSE:688013) shareholders would be excited to see that the share price has had a great month, posting a 31% gain and recovering from prior weakness. Longer-term shareholders would be thankful for the recovery in the share price since it's now virtually flat for the year after the recent bounce.
Following the firm bounce in price, Touchstone International Medical Science's price-to-earnings (or "P/E") ratio of 53.2x might make it look like a strong sell right now compared to the market in China, where around half of the companies have P/E ratios below 31x and even P/E's below 18x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/E.
As an illustration, earnings have deteriorated at Touchstone International Medical Science over the last year, which is not ideal at all. One possibility is that the P/E is high because investors think the company will still do enough to outperform the broader market in the near future. If not, then existing shareholders may be quite nervous about the viability of the share price.
See our latest analysis for Touchstone International Medical Science
SHSE:688013 Price Based on Past Earnings October 26th 2022 Want the full picture on earnings, revenue and cash flow for the company? Then our
free report on Touchstone International Medical Science will help you shine a light on its historical performance.
How Is Touchstone International Medical Science's Growth Trending?
In order to justify its P/E ratio, Touchstone International Medical Science would need to produce outstanding growth well in excess of 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 23%. The last three years don't look nice either as the company has shrunk EPS by 36% in aggregate. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.
Weighing that medium-term earnings trajectory against the broader market's one-year forecast for expansion of 41% shows it's an unpleasant look.
In light of this, it's alarming that Touchstone International Medical Science'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 Final Word
The strong share price surge has got Touchstone International Medical Science's P/E rushing to great heights as well. 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.
Our examination of Touchstone International Medical Science 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. Unless the recent medium-term conditions improve markedly, it's very challenging to accept these prices as being reasonable.
Before you settle on your opinion, we've discovered 1 warning sign for Touchstone International Medical Science that you should be aware of.
If you're unsure about the strength of Touchstone International Medical Science's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.
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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.
試金石國際醫學科學有限公司。(上海證券交易所股票代碼:688013)股東們會很興奮地看到股價經歷了一個很棒的月份,上漲了31%,並從之前的疲軟中恢復過來。較長期的股東將對股價的回升感到欣慰,因為在最近的反彈之後,股價在一年內幾乎持平。
隨着股價的強勁反彈,試金石國際醫療科學公司53.2倍的市盈率可能會讓它看起來像是一個強勁的賣盤,而在中國的市場上,大約一半的公司的市盈率低於31倍,甚至低於18倍的市盈率也很常見。儘管如此,我們還需要更深入地挖掘,以確定市盈率大幅上升是否有合理的基礎。
作為例證,試金石國際醫學科學公司的收入在過去一年裏一直在惡化,這根本不是理想的情況。一種可能性是,市盈率很高,因為投資者認為該公司在不久的將來仍將採取足夠的措施來跑贏大盤。如果不是,那麼現有股東可能會對股價的生存能力感到相當緊張。
查看我們對試金石國際醫學科學的最新分析
上海證交所:688013基於過去收益的價格2022年10月26日想要了解公司的收益、收入和現金流的全貌嗎?那麼我們的
免費試金石國際醫學報告將幫助您瞭解其歷史表現。
試金石國際醫學科學的發展趨勢如何?
為了證明其市盈率是合理的,試金石國際醫學科學公司需要實現遠遠超出市場的出色增長。
先回過頭來看,該公司去年的每股收益增長並不值得興奮,因為它公佈了令人失望的23%的降幅。過去三年看起來也不妙,因為該公司每股收益總計縮水了36%。因此,公平地説,最近的收益增長對公司來説是不可取的。
將這一中期收益軌跡與大盤一年增長41%的預期進行比較,可以看出這是一個令人不快的前景。
有鑑於此,試金石國際醫學科學公司的市盈率高於其他大多數公司,這令人擔憂。顯然,該公司的許多投資者比最近的情況所顯示的要樂觀得多,不願以任何價格拋售他們的股票。如果市盈率下降到與最近負增長更一致的水平,現有股東很有可能會讓自己未來感到失望。
最後的結論
強勁的股價飆升也推動Touchstone International Medical Science的市盈率飆升。雖然市盈率不應該是你是否買入一隻股票的決定性因素,但它是一個很好的盈利預期晴雨表。
我們對Touchstone International Medical Science的調查顯示,考慮到市場將會增長,Touchstone國際醫學科學公司中期收益的縮水對其高市盈率的影響並不像我們預期的那樣大。當我們看到盈利出現倒退,表現遜於市場預期時,我們懷疑股價有下跌的風險,導致高市盈率走低。除非最近的中期狀況明顯改善,否則要接受這些價格是合理的是非常具有挑戰性的。
在你決定你的觀點之前,我們發現試金石國際醫學科學的1個警告標誌這一點你應該知道。
如果你.不確定試金石國際醫學科學公司的業務實力,為什麼不探索我們的互動列表,為其他一些你可能沒有達到預期的公司提供堅實的商業基本面。
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本文由Simply Wall St.撰寫,具有概括性。我們僅使用不偏不倚的方法提供基於歷史數據和分析師預測的評論,我們的文章並不打算作為財務建議。它不構成買賣任何股票的建議,也沒有考慮你的目標或你的財務狀況。我們的目標是為您帶來由基本面數據驅動的長期重點分析。請注意,我們的分析可能不會將最新的對價格敏感的公司公告或定性材料考慮在內。Simply Wall St.對上述任何一隻股票都沒有持倉。