Stock Analysis

Shareholders Should Be Pleased With Bloomage BioTechnology Corporation Limited's (SHSE:688363) Price

SHSE:688363
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Bloomage BioTechnology Corporation Limited's (SHSE:688363) price-to-earnings (or "P/E") ratio of 53.3x might make it look like a sell right now compared to the market in China, where around half of the companies have P/E ratios below 36x and even P/E's below 20x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the elevated P/E.

With earnings that are retreating more than the market's of late, Bloomage BioTechnology has been very sluggish. It might be that many expect the dismal earnings performance to recover substantially, which has kept the P/E from collapsing. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

See our latest analysis for Bloomage BioTechnology

pe-multiple-vs-industry
SHSE:688363 Price to Earnings Ratio vs Industry February 12th 2025
Keen to find out how analysts think Bloomage BioTechnology's future stacks up against the industry? In that case, our free report is a great place to start.

Is There Enough Growth For Bloomage BioTechnology?

There's an inherent assumption that a company should outperform the market for P/E ratios like Bloomage BioTechnology's to be considered reasonable.

Taking a look back first, the company's earnings per share growth last year wasn't something to get excited about as it posted a disappointing decline of 46%. As a result, earnings from three years ago have also fallen 43% overall. Accordingly, shareholders would have felt downbeat about the medium-term rates of earnings growth.

Turning to the outlook, the next year should generate growth of 44% as estimated by the analysts watching the company. Meanwhile, the rest of the market is forecast to only expand by 37%, which is noticeably less attractive.

In light of this, it's understandable that Bloomage BioTechnology's P/E sits above the majority of other companies. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

What We Can Learn From Bloomage BioTechnology's P/E?

Using the price-to-earnings ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

As we suspected, our examination of Bloomage BioTechnology's analyst forecasts revealed that its superior earnings outlook is contributing to its high P/E. At this stage investors feel the potential for a deterioration in earnings isn't great enough to justify a lower P/E ratio. It's hard to see the share price falling strongly in the near future under these circumstances.

It's always necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Bloomage BioTechnology, and understanding them should be part of your investment process.

If P/E ratios interest you, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

Valuation is complex, but we're here to simplify it.

Discover if Bloomage BioTechnology might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

Access Free Analysis

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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.

About SHSE:688363

Bloomage BioTechnology

Bloomage BioTechnology Corporation Limited researchers, develops, produces, and sells bioactive materials.

Flawless balance sheet with moderate growth potential.

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