A Piece Of The Puzzle Missing From Les Docks des Pétroles d'Ambès -SA's (EPA:DPAM) 27% Share Price Climb

Despite an already strong run, Les Docks des Pétroles d'Ambès -SA (EPA:DPAM) shares have been powering on, with a gain of 27% in the last thirty days. The last month tops off a massive increase of 104% in the last year.

Although its price has surged higher, it's still not a stretch to say that Les Docks des Pétroles d'Ambès -SA's price-to-earnings (or "P/E") ratio of 16.4x right now seems quite "middle-of-the-road" compared to the market in France, where the median P/E ratio is around 16x. 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.

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Les Docks des Pétroles d'Ambès -SA certainly has been doing a great job lately as it's been growing earnings at a really rapid pace. It might be that many expect the strong earnings performance to wane, which has kept the P/E from rising. If that doesn't eventuate, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

See our latest analysis for Les Docks des Pétroles d'Ambès -SA

We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Les Docks des Pétroles d'Ambès -SA's earnings, revenue and cash flow.

How Is Les Docks des Pétroles d'Ambès -SA's Growth Trending?

There's an inherent assumption that a company should be matching the market for P/E ratios like Les Docks des Pétroles d'Ambès -SA's to be considered reasonable.

Taking a look back first, we see that the company grew earnings per share by an impressive 43% last year. The strong recent performance means it was also able to grow EPS by 70% in total over the last three years. Therefore, it's fair to say the earnings growth recently has been superb for the company.

Weighing that recent medium-term earnings trajectory against the broader market's one-year forecast for expansion of 16% shows it's noticeably more attractive on an annualised basis.

With this information, we find it interesting that Les Docks des Pétroles d'Ambès -SA is trading at a fairly similar P/E to the market. It may be that most investors are not convinced the company can maintain its recent growth rates.

The Key Takeaway

Les Docks des Pétroles d'Ambès -SA appears to be back in favour with a solid price jump getting its P/E back in line with most other companies. 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.

We've established that Les Docks des Pétroles d'Ambès -SA currently trades on a lower than expected P/E since its recent three-year growth is higher than the wider market forecast. When we see strong earnings with faster-than-market 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 the persistence of these recent medium-term conditions would normally provide a boost to the share price.

And what about other risks? Every company has them, and we've spotted 1 warning sign for Les Docks des Pétroles d'Ambès -SA you should know about.

Of course, you might also be able to find a better stock than Les Docks des Pétroles d'Ambès -SA. 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.