Malaysia’s median price-to-earnings ratio (or “P/E”) is close to 13x, so indifference might be forgiven. YSP Southeast Asia Holding Berhad’s (KLSE:YSPSAH) PER 11.1x. While this may not be frowned upon, investors may miss out on potential opportunities or ignore looming disappointments if the P/E ratio is not justified.
For YSP Southeast Asia Holding Berhad it has been very favorable recently as its earnings have been rising very briskly. Investors believe this strong earnings growth may not be enough to outperform the broader market in the near future, so the P/E ratio is likely middling. If you like the company, you’re hoping it doesn’t.
Read the latest analysis from YSP Southeast Asia Holding Berhad.
Want a complete picture of your company’s earnings, earnings and cash flow? freedom Our report on YSP Southeast Asia Holding Berhad helps shed light on its historic achievements.
What do growth metrics tell us about PER?
To justify its PER, YSP Southeast Asia Holding Berhad needs to generate growth similar to the market.
Looking back first, the company’s earnings per share grew a staggering 103% last year. EPS is also up 22% for him overall from his three years ago, largely thanks to growth over the last 12 months. Therefore, shareholders were probably happy with medium-term earnings growth.
Interestingly, the remaining markets are also expected to grow by 8.7% next year. This is roughly in line with the company’s recent medium-term annual growth rate.
With this information, we can see why YSP Southeast Asia Holding Berhad is trading at nearly the same P/E as the market. Most investors expect average growth rates to continue into the future and are only willing to pay modest amounts for stocks.
The last word
While we’re usually careful not to read too much into price/earnings ratios when making investment decisions, they can tell us a lot about what other market participants think of the company.
YSP Southeast Asia Holding Berhad has confirmed that it has maintained a moderate P/E on the back of recent three-year growth, as expected, and in line with broader market expectations. Shareholders are now happy with the P/E ratio because they are confident that future earnings will not have unexpected consequences. If such medium-term performance trends continue, it is difficult to imagine that the stock price will move significantly in either direction in the near future.
For example, you should be aware of risks such as − YSP Southeast Asia Holding Berhad has two warning signs (and a slightly offensive 1) I think you should know.
You may find a better investment than YSP Southeast Asia Holding Berhad.If you want to narrow down the candidates, check here freedom An interesting list of companies trading at less than 20x P/E (although they have proven they can grow their earnings).
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This article by Simply Wall St is general in nature. We provide comments based on historical data and analyst projections using only unbiased methodologies and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. We aim to deliver long-term focused analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Is not …
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