Antony Waste Handling Cell Limited (NSE:AWHCL) Shares Fly 26% But Investors Aren't Buying For Growth

Despite an already strong run, Antony Waste Handling Cell Limited (NSE:AWHCL) shares have been powering on, with a gain of 26% in the last thirty days. The annual gain comes to 130% following the latest surge, making investors sit up and take notice.

Although its price has surged higher, Antony Waste Handling Cell's price-to-earnings (or "P/E") ratio of 24.9x might still make it look like a buy right now compared to the market in India, where around half of the companies have P/E ratios above 33x and even P/E's above 62x are quite common. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's limited.

Recent times have been quite advantageous for Antony Waste Handling Cell as its earnings have been rising very briskly. One possibility is that the P/E is low because investors think this strong earnings growth might actually underperform the broader market in the near future. 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.

Check out our latest analysis for Antony Waste Handling Cell

Although there are no analyst estimates available for Antony Waste Handling Cell, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.

How Is Antony Waste Handling Cell's Growth Trending?

There's an inherent assumption that a company should underperform the market for P/E ratios like Antony Waste Handling Cell's to be considered reasonable.

Retrospectively, the last year delivered an exceptional 35% gain to the company's bottom line. The latest three year period has also seen an excellent 48% overall rise in EPS, aided by its short-term performance. 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 26% shows it's noticeably less attractive on an annualised basis.

With this information, we can see why Antony Waste Handling Cell is trading at a P/E lower than the market. Apparently many shareholders weren't comfortable holding on to something they believe will continue to trail the bourse.

What We Can Learn From Antony Waste Handling Cell's P/E?

Antony Waste Handling Cell's stock might have been given a solid boost, but its P/E certainly hasn't reached any great heights. 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.

As we suspected, our examination of Antony Waste Handling Cell revealed its three-year earnings trends are contributing to its low P/E, given they look worse than current market expectations. At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio. Unless the recent medium-term conditions improve, they will continue to form a barrier for the share price around these levels.

Plus, you should also learn about these 2 warning signs we've spotted with Antony Waste Handling Cell (including 1 which shouldn't be ignored).

Of course, you might also be able to find a better stock than Antony Waste Handling Cell. 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.