Not Many Are Piling Into Ningbo Jintian Copper (Group) Co., Ltd. (SHSE:601609) Just Yet

When close to half the companies in China have price-to-earnings ratios (or "P/E's") above 27x, you may consider Ningbo Jintian Copper (Group) Co., Ltd. (SHSE:601609) as an attractive investment with its 20.7x P/E ratio. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's limited.

With its earnings growth in positive territory compared to the declining earnings of most other companies, Ningbo Jintian Copper (Group) has been doing quite well of late. It might be that many expect the strong earnings performance to degrade substantially, possibly more than the market, which has repressed the P/E. 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 out of favour.

See our latest analysis for Ningbo Jintian Copper (Group)

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Ningbo Jintian Copper (Group).

What Are Growth Metrics Telling Us About The Low P/E?

In order to justify its P/E ratio, Ningbo Jintian Copper (Group) would need to produce sluggish growth that's trailing the market.

Retrospectively, the last year delivered a decent 4.5% gain to the company's bottom line. Still, lamentably EPS has fallen 43% in aggregate from three years ago, which is disappointing. 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 three years should generate growth of 33% per annum as estimated by the dual analysts watching the company. That's shaping up to be materially higher than the 19% each year growth forecast for the broader market.

In light of this, it's peculiar that Ningbo Jintian Copper (Group)'s P/E sits below the majority of other companies. It looks like most investors are not convinced at all that the company can achieve future growth expectations.

The Key Takeaway

While the price-to-earnings ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of earnings expectations.

Our examination of Ningbo Jintian Copper (Group)'s analyst forecasts revealed that its superior earnings outlook isn't contributing to its P/E anywhere near as much as we would have predicted. When we see a strong earnings outlook with faster-than-market growth, we assume potential risks are what might be placing significant pressure on the P/E ratio. It appears many are indeed anticipating earnings instability, because these conditions should normally provide a boost to the share price.

Don't forget that there may be other risks. For instance, we've identified 2 warning signs for Ningbo Jintian Copper (Group) (1 can't be ignored) you should be aware of.

Of course, you might also be able to find a better stock than Ningbo Jintian Copper (Group). So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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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.