Moon Environmental Technology Co., Ltd. (SZSE:000811) Share price soars 25%, but investors aren’t buying for growth.



Moon Environmental Technology Co., Ltd. (SZSE:000811) shareholders will no doubt be happy to see the share price up 25% in the last month, but it’s still struggling to regain some recent loss. However, last month’s gains weren’t enough to reassure shareholders, as the stock is still down 4.4% over the past 12 months.

Although prices have soared, Moon Environmental Technology still sends a very bullish signal at the moment, as almost half of all companies in China have a price-to-earnings ratio of 14.2x. there is a possibility. It is not uncommon for /E ratios to exceed 31x and P/E ratios to exceed 56x. Nevertheless, we need to dig a little deeper to determine whether there is a rational basis for the significantly lower P/E ratio.

Recent developments have been positive for Moon Environmental TechnologyLtd, with earnings increasing despite a reversal in market earnings. One possibility is that the P/E ratio is low because investors think this company’s profits will decline as quickly as other companies. Even if it doesn’t, existing shareholders have reason to be very optimistic about the future direction of the share price.

Check out our latest analysis for Moon Environmental TechnologyLtd.

PE multiple versus industry
SZSE:000811 Price Earnings Ratio vs. Industry March 4, 2024

Would you like to know how analysts think Moon Environmental Technology Ltd’s future compares to its industry? If so, we have free Reports are a great place to start.

Is there growth in Moon Environmental Technology Ltd?

Moon Environmental TechnologyLtd’s P/E ratio is typical of a company that is expected to have very low growth or declining earnings, and importantly, is performing much worse than the market.

Looking back at last year’s revenue growth, the company posted an impressive 65% increase. Strong recent performance means he has been able to grow EPS by a total of 93% over the past three years. So we can start by seeing that the company has done a great job of growing its earnings over that period.

Turning to the outlook, the next year should deliver 24% growth, as estimated by the two analysts who monitor the company. This figure is expected to be significantly lower than the overall market growth forecast of 41%.

With this in mind, it’s understandable that Moon Environmental TechnologyLtd’s P/E ratio is lower than most other companies. Apparently, many shareholders were reluctant to continue holding on to the company, given the possibility that it would lose its future prosperity.

Important points

Moon Environmental TechnologyLtd’s share price will need further significant upward momentum to lift the company’s P/E ratio out of its doldrums. Although the price-to-earnings ratio should not be the deciding factor in whether or not to buy a stock, it is a very useful barometer of earnings expectations.

As expected, we find that Moon Environmental Technology Ltd maintains a low P/E ratio due to its growth forecast being lower than the broader market. For now, shareholders are accepting the low P/E ratio as they accept that future earnings probably won’t bring pleasant surprises. Unless this situation improves, a barrier to stock prices will continue to form around these levels.

You should always think about risk.Good example we found 2 warning signs for Moon Environmental TechnologyLtd you should know.

If you are interested in P/E ratioyou might want to see this free A collection of other companies with high earnings growth and low P/E ratios.

Valuation is complex, but we help make it simple.

Please check it out Moon Environment Technology Co., Ltd. Could be overvalued or undervalued, check out our comprehensive analysis. 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 based on historical data and analyst forecasts using only unbiased methodologies, 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.

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