Analyst I.M.S. Investment Management Services Ltd (TLV:ANLT) Stock Rockets 28% As Investors Are Less Pessimistic Than Expected

Despite an already strong run, Analyst I.M.S. Investment Management Services Ltd (TLV:ANLT) shares have been powering on, with a gain of 28% in the last thirty days. The last 30 days bring the annual gain to a very sharp 78%.

Although its price has surged higher, there still wouldn't be many who think Analyst I.M.S. Investment Management Services' price-to-earnings (or "P/E") ratio of 14.3x is worth a mention when the median P/E in Israel is similar at about 14x. While this might not raise any eyebrows, if the P/E ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

Recent times have been quite advantageous for Analyst I.M.S. Investment Management Services as its earnings have been rising very briskly. It might be that many expect the strong earnings performance to wane, which has kept the P/E from rising. 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 not quite in favour.

See our latest analysis for Analyst I.M.S. Investment Management Services

Although there are no analyst estimates available for Analyst I.M.S. Investment Management Services, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.

Is There Some Growth For Analyst I.M.S. Investment Management Services?

The only time you'd be comfortable seeing a P/E like Analyst I.M.S. Investment Management Services' is when the company's growth is tracking the market closely.

If we review the last year of earnings growth, the company posted a terrific increase of 204%. Pleasingly, EPS has also lifted 61% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have probably welcomed those medium-term rates of earnings growth.

Comparing that to the market, which is predicted to deliver 32% growth in the next 12 months, the company's momentum is weaker based on recent medium-term annualised earnings results.

In light of this, it's curious that Analyst I.M.S. Investment Management Services' P/E sits in line with the majority of other companies. It seems most investors are ignoring the fairly limited recent growth rates and are willing to pay up for exposure to the stock. They may be setting themselves up for future disappointment if the P/E falls to levels more in line with recent growth rates.

What We Can Learn From Analyst I.M.S. Investment Management Services' P/E?

Analyst I.M.S. Investment Management Services' stock has a lot of momentum behind it lately, which has brought its P/E level with the market. Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

We've established that Analyst I.M.S. Investment Management Services currently trades on a higher than expected P/E since its recent three-year growth is lower than the wider market forecast. When we see weak earnings with slower than market growth, we suspect the share price is at risk of declining, sending the moderate P/E lower. If recent medium-term earnings trends continue, it will place shareholders' investments at risk and potential investors in danger of paying an unnecessary premium.

Having said that, be aware Analyst I.M.S. Investment Management Services is showing 1 warning sign in our investment analysis, you should know about.

If you're unsure about the strength of Analyst I.M.S. Investment Management Services' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.