The Keck Seng Investments (Hong Kong) Limited (HKG:184) share price has done very well over the last month, posting an excellent gain of 27%. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 16% over that time.
In spite of the firm bounce in price, Keck Seng Investments (Hong Kong) may still be sending very bullish signals at the moment with its price-to-earnings (or "P/E") ratio of 3.8x, since almost half of all companies in Hong Kong have P/E ratios greater than 9x and even P/E's higher than 18x are not unusual. However, the P/E might be quite low for a reason and it requires further investigation to determine if it's justified.
Keck Seng Investments (Hong Kong) certainly has been doing a great job lately as it's been growing earnings at a really rapid pace. One possibility is that the P/E is low because investors think this strong earnings growth might actually underperform the broader market in the near future. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.
Although there are no analyst estimates available for Keck Seng Investments (Hong Kong), take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
What Are Growth Metrics Telling Us About The Low P/E?
There's an inherent assumption that a company should far underperform the market for P/E ratios like Keck Seng Investments (Hong Kong)'s to be considered reasonable.
Taking a look back first, we see that the company grew earnings per share by an impressive 188% last year. Still, EPS has barely risen at all from three years ago in total, which is not ideal. So it appears to us that the company has had a mixed result in terms of growing earnings over that time.
Comparing that to the market, which is predicted to deliver 22% growth in the next 12 months, the company's momentum is weaker based on recent medium-term annualised earnings results.
With this information, we can see why Keck Seng Investments (Hong Kong) is trading at a P/E lower than the market. It seems most investors are expecting to see the recent limited growth rates continue into the future and are only willing to pay a reduced amount for the stock.
What We Can Learn From Keck Seng Investments (Hong Kong)'s P/E?
Shares in Keck Seng Investments (Hong Kong) are going to need a lot more upward momentum to get the company's P/E out of its slump. 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 Keck Seng Investments (Hong Kong) maintains its low P/E on the weakness of its recent three-year growth being lower than the wider market forecast, 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 rising strongly in the near future under these circumstances.
The company's balance sheet is another key area for risk analysis. You can assess many of the main risks through our free balance sheet analysis for Keck Seng Investments (Hong Kong) with six simple checks.
If these risks are making you reconsider your opinion on Keck Seng Investments (Hong Kong), explore our interactive list of high quality stocks to get an idea of what else is out there.
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Keck Seng Investments(香港)有限公司(HKG: 184)的股價在上個月表現良好,漲幅爲27%。不幸的是,上個月的漲幅幾乎沒有彌補去年的虧損,在此期間,該股仍下跌了16%。
儘管價格穩步反彈,但Keck Seng Investments(香港)目前可能仍會發出非常看漲的信號,其市盈率(或 “市盈率”)爲3.8倍,因爲幾乎一半的香港公司的市盈率大於9倍,甚至市盈率高於18倍也並不罕見。但是,市盈率可能很低是有原因的,需要進一步調查以確定其是否合理。
Keck Seng Investments(香港)最近確實做得很好,因爲它的收益增長非常快。一種可能性是市盈率很低,因爲投資者認爲這種強勁的收益增長在不久的將來實際上可能低於整個市場。如果你喜歡這家公司,你希望情況並非如此,這樣你就有可能在它失寵的時候買入一些股票。
儘管沒有分析師對Keck Seng Investments(香港)的估計,但看看這個免費的數據豐富的可視化工具,看看該公司如何積累收益、收入和現金流。
關於低市盈率,增長指標告訴我們什麼?
人們固有的假設是,如果像Keck Seng Investments(香港)這樣的市盈率才算合理,公司的表現應該遠遠低於市場。