Market Participants Recognise Hainan Jinpan Smart Technology Co., Ltd.'s (SHSE:688676) Earnings Pushing Shares 29% Higher

Despite an already strong run, Hainan Jinpan Smart Technology Co., Ltd. (SHSE:688676) shares have been powering on, with a gain of 29% in the last thirty days. Looking further back, the 15% rise over the last twelve months isn't too bad notwithstanding the strength over the last 30 days.

Although its price has surged higher, you could still be forgiven for feeling indifferent about Hainan Jinpan Smart Technology's P/E ratio of 32.6x, since the median price-to-earnings (or "P/E") ratio in China is also close to 36x. Although, it's not wise to simply ignore the P/E without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

With its earnings growth in positive territory compared to the declining earnings of most other companies, Hainan Jinpan Smart Technology has been doing quite well of late. It might be that many expect the strong earnings performance to deteriorate like the rest, which has kept the P/E from rising. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.

View our latest analysis for Hainan Jinpan Smart Technology

Keen to find out how analysts think Hainan Jinpan Smart Technology's future stacks up against the industry? In that case, our free report is a great place to start.

How Is Hainan Jinpan Smart Technology's Growth Trending?

The only time you'd be comfortable seeing a P/E like Hainan Jinpan Smart Technology's is when the company's growth is tracking the market closely.

Taking a look back first, we see that the company grew earnings per share by an impressive 22% last year. Pleasingly, EPS has also lifted 117% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have probably welcomed those medium-term rates of earnings growth.

Turning to the outlook, the next year should generate growth of 42% as estimated by the nine analysts watching the company. That's shaping up to be similar to the 38% growth forecast for the broader market.

With this information, we can see why Hainan Jinpan Smart Technology is trading at a fairly similar P/E to the market. It seems most investors are expecting to see average future growth and are only willing to pay a moderate amount for the stock.

The Key Takeaway

Hainan Jinpan Smart Technology appears to be back in favour with a solid price jump getting its P/E back in line with most other companies. Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

We've established that Hainan Jinpan Smart Technology maintains its moderate P/E off the back of its forecast growth being in line with the wider market, as expected. Right now shareholders are comfortable with the P/E as they are quite confident future earnings won't throw up any surprises. It's hard to see the share price moving strongly in either direction in the near future under these circumstances.

Plus, you should also learn about these 3 warning signs we've spotted with Hainan Jinpan Smart Technology.

Of course, you might find a fantastic investment by looking at a few good candidates. So take a peek at this free list of companies with a strong growth track record, trading on a low P/E.

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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.