The Market Lifts Tianjin LVYIN Landscape and Ecology Construction Co., Ltd (SZSE:002887) Shares 25% But It Can Do More

Tianjin LVYIN Landscape and Ecology Construction Co., Ltd (SZSE:002887) shares have had a really impressive month, gaining 25% after a shaky period beforehand. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 17% in the last twelve months.

Even after such a large jump in price, given about half the companies in China have price-to-earnings ratios (or "P/E's") above 33x, you may still consider Tianjin LVYIN Landscape and Ecology Construction as an attractive investment with its 19.8x P/E ratio. However, the P/E might be low for a reason and it requires further investigation to determine if it's justified.

Tianjin LVYIN Landscape and Ecology Construction hasn't been tracking well recently as its declining earnings compare poorly to other companies, which have seen some growth on average. It seems that many are expecting the dour earnings performance to persist, which has repressed the P/E. If you still like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

See our latest analysis for Tianjin LVYIN Landscape and Ecology Construction

Keen to find out how analysts think Tianjin LVYIN Landscape and Ecology Construction's future stacks up against the industry? In that case, our free report is a great place to start.

How Is Tianjin LVYIN Landscape and Ecology Construction's Growth Trending?

Tianjin LVYIN Landscape and Ecology Construction's P/E ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the market.

If we review the last year of earnings, dishearteningly the company's profits fell to the tune of 29%. This means it has also seen a slide in earnings over the longer-term as EPS is down 59% in total over the last three years. So unfortunately, we have to acknowledge that the company has not done a great job of growing earnings over that time.

Turning to the outlook, the next year should generate growth of 38% as estimated by the sole analyst watching the company. With the market predicted to deliver 38% growth , the company is positioned for a comparable earnings result.

In light of this, it's peculiar that Tianjin LVYIN Landscape and Ecology Construction's P/E sits below the majority of other companies. Apparently some shareholders are doubtful of the forecasts and have been accepting lower selling prices.

The Bottom Line On Tianjin LVYIN Landscape and Ecology Construction's P/E

Despite Tianjin LVYIN Landscape and Ecology Construction's shares building up a head of steam, its P/E still lags most other companies. Generally, our preference is to limit the use of the price-to-earnings ratio to establishing what the market thinks about the overall health of a company.

We've established that Tianjin LVYIN Landscape and Ecology Construction currently trades on a lower than expected P/E since its forecast growth is in line with the wider market. When we see an average earnings outlook with market-like growth, we assume potential risks are what might be placing pressure on the P/E ratio. It appears some are indeed anticipating earnings instability, because these conditions should normally provide more support to the share price.

Don't forget that there may be other risks. For instance, we've identified 1 warning sign for Tianjin LVYIN Landscape and Ecology Construction that you should be aware of.

You might be able to find a better investment than Tianjin LVYIN Landscape and Ecology Construction. If you want a selection of possible candidates, check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.