Shareholders are nervous about the EPS decline. The recent sell-off could be an opportunity, but Shanghai Fudan Microelectronics Group has 2 warning signs investors should be aware of.
Despite a superior earnings outlook, Shanghai Fudan Microelectronics Group's P/E ratio doesn't reflect this positivity as expected. Unobserved threats to earnings may be a factor, with some shareholders anticipating earnings instability.
The growth in Shanghai Fudan Microelectronics Group's ROCE combined with an increase in its capital employed is a positive trend, which has begun to be recognized by investors.
Investors' high expectations of Shanghai Fudan Microelectronics are curious given its mere 24% predicted EPS increase for the coming year. This level of growth may depress the share price, suggesting further gains may be difficult.
Long-term investors would not be as concerned since they made annual gains of 11% over five years. If the company's fundamentals continue to indicate long-term sustainable growth, the current sell-off could be considered a good buying opportunity.
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