Nexteer Automotive Group Limited (HKG:1316) shareholders won't be happy to see that it's been a very tough month, with the share price down 28%, eroding last year's strong performance. The decline over the past 30 days caps off a tough year for shareholders, during which the stock price fell 45%.
Although the price has fallen significantly, the median price-to-earnings (or 'P/E') ratio in Hong Kong is also close, so it's understandable to feel indifferent about Nexteer Automotive Group's P/E of 10.1x. Up to 9 times. However, if the P/E ratio does not have a rational basis, investors may miss clear opportunities or potential setbacks.
Things have been good for Nexteer Automotive Group recently, as its revenue has been increasing despite adverse market returns. Many people expect that the company's strong performance will deteriorate just like other companies, so the P/E ratio may not increase. If you like the company, you'll want it to be that way so you can potentially buy shares while it's not very lucrative.
Check out our latest analysis for Nexteer Automotive Group.
Want to know how analysts think Nexteer Automotive Group's future compares to its industry? free Reports are a great place to start.
What are the growth trends for Nexteer Automotive Group?
Nexteer Automotive Group's P/E ratio is typical for a company that is expected to have only moderate growth, and importantly, is also expected to perform in line with the market.
First, looking back at the past, we can see that the company grew its earnings per share by an impressive 327% in the last year. However, his last three years haven't been all that great as he hasn't shown any growth. So it's safe to say that the company's profit growth has been inconsistent lately.
Looking to the future, analysts covering the company estimate that revenue should grow 27% annually over the next three years. This is shaping up to be significantly higher than the broader market's annual growth forecast of 16%.
With this information, we find it interesting that Nexteer Automotive Group is trading at a P/E ratio that is roughly in line with the market. It appears that some shareholders are skeptical about this outlook and are willing to accept a lower selling price.
What can we learn from Nexteer Automotive Group's P/E ratio?
Nexteer Automotive Group's stock price has fallen sharply, sending its P/E ratio back to the rest of the market. The power of the price-to-earnings ratio is not primarily as a valuation tool, but rather as a gauge of current investor sentiment and future expectations.
After examining analyst forecasts for Nexteer Automotive Group, we found that the company's strong earnings outlook is not contributing as much to the company's P/E ratio as expected. If we see a solid earnings outlook with above-market growth, we assume that potential risks may be putting pressure on his P/E ratio. Such a situation would normally push stock prices higher, so some people are actually predicting earnings instability.
A company's balance sheet is another important area of risk analysis.our free Analyzing Nexteer Automotive Group's balance sheet with 6 simple checks can uncover potentially troubling risks.
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Valuation is complex, but we help make it simple.
Check out our comprehensive analysis, including below, to see if Nexteer Automotive Group is potentially overvalued or undervalued. Fair value estimates, risks and caveats, dividends, insider trading, and financial health.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
