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 集團控股有限公司(HKG: 1412)股東不會高興地看到,股價經歷了一個非常艱難的月份,下跌了44%,抵消了前一時期的積極表現。在過去十二個月中已經持股的股東沒有獲得回報,反而坐視股價下跌了23%。
儘管其價格已大幅下跌,但Q P Group Holdings目前可能仍在發出看漲信號,其市盈率(或 “市盈率”)爲7.1倍,因爲幾乎一半的香港公司的市盈率大於10倍,甚至市盈率高於20倍也並不罕見。儘管如此,我們需要更深入地挖掘以確定降低市盈率是否有合理的基礎。
例如,考慮一下由於收益下降,Q P Group Holdings的財務表現不佳。許多人可能預計,令人失望的收益表現將持續或加速,這抑制了市盈率。但是,如果最終沒有出現這種情況,那麼現有股東可能會對股價的未來走向感到樂觀。
我們沒有分析師的預測,但您可以查看我們關於Q P Group Holdings收益、收入和現金流的免費報告,了解最近的趨勢如何爲公司未來做好準備。
增長與低市盈率相匹配嗎?
Q P Group Holdings的市盈率對於一家預計增長有限,而且重要的是表現不如市場的公司來說是典型的。