Stock Analysis

Getting In Cheap On Infinity Logistics and Transport Ventures Limited (HKG:1442) Is Unlikely

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SEHK:1442
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When close to half the companies in Hong Kong have price-to-earnings ratios (or "P/E's") below 9x, you may consider Infinity Logistics and Transport Ventures Limited (HKG:1442) as a stock to avoid entirely with its 25.2x P/E ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/E.

Recent times have been quite advantageous for Infinity Logistics and Transport Ventures as its earnings have been rising very briskly. It seems that many are expecting the strong earnings performance to beat most other companies over the coming period, which has increased investors’ willingness to pay up for the stock. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

View our latest analysis for Infinity Logistics and Transport Ventures

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SEHK:1442 Price Based on Past Earnings July 22nd 2022
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 Infinity Logistics and Transport Ventures' earnings, revenue and cash flow.

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

The only time you'd be truly comfortable seeing a P/E as steep as Infinity Logistics and Transport Ventures' is when the company's growth is on track to outshine the market decidedly.

If we review the last year of earnings growth, the company posted a terrific increase of 65%. The strong recent performance means it was also able to grow EPS by 37% 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 15% shows it's noticeably less attractive on an annualised basis.

With this information, we find it concerning that Infinity Logistics and Transport Ventures is trading at a P/E higher than the market. Apparently many investors in the company are way more bullish than recent times would indicate and aren't willing to let go of their stock at any price. Only the boldest would assume these prices are sustainable as a continuation of recent earnings trends is likely to weigh heavily on the share price eventually.

What We Can Learn From Infinity Logistics and Transport Ventures' P/E?

It's argued the price-to-earnings ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

We've established that Infinity Logistics and Transport Ventures currently trades on a much higher than expected P/E since its recent three-year growth is lower than the wider market forecast. Right now we are increasingly uncomfortable with the high P/E as this earnings performance isn't likely to support such positive sentiment for long. If recent medium-term earnings trends continue, it will place shareholders' investments at significant risk and potential investors in danger of paying an excessive premium.

It is also worth noting that we have found 3 warning signs for Infinity Logistics and Transport Ventures (1 shouldn't be ignored!) that you need to take into consideration.

If these risks are making you reconsider your opinion on Infinity Logistics and Transport Ventures, explore our interactive list of high quality stocks to get an idea of what else is out there.

Valuation is complex, but we're helping make it simple.

Find out whether Infinity Logistics and Transport Ventures is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About SEHK:1442

Infinity Logistics and Transport Ventures

Infinity Logistics and Transport Ventures Limited, an investment holding company, provides logistics services in China, Indonesia, Malaysia, the Netherlands, Singapore, South Korea, Thailand, Vietnam, and internationally.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation0
Future Growth0
Past Performance4
Financial Health5
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Excellent balance sheet with proven track record.