Osia Hyper Retail Limited (NSE:OSIAHYPER) Stock's 30% Dive Might Signal An Opportunity But It Requires Some Scrutiny

Unfortunately for some shareholders, the Osia Hyper Retail Limited (NSE:OSIAHYPER) share price has dived 30% in the last thirty days, prolonging recent pain. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 30% in that time.

Following the heavy fall in price, Osia Hyper Retail may be sending very bullish signals at the moment with its price-to-earnings (or "P/E") ratio of 9.1x, since almost half of all companies in India have P/E ratios greater than 29x and even P/E's higher than 56x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly reduced P/E.

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With earnings growth that's exceedingly strong of late, Osia Hyper Retail has been doing very well. It might be that many expect the strong earnings performance to degrade substantially, 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 Osia Hyper Retail

Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Osia Hyper Retail will help you shine a light on its historical performance.

Is There Any Growth For Osia Hyper Retail?

There's an inherent assumption that a company should far underperform the market for P/E ratios like Osia Hyper Retail's to be considered reasonable.

Taking a look back first, we see that the company grew earnings per share by an impressive 46% last year. The strong recent performance means it was also able to grow EPS by 93% in total over the last three years. So we can start by confirming that the company has done a great job of growing earnings over that time.

It's interesting to note that the rest of the market is similarly expected to grow by 23% over the next year, which is fairly even with the company's recent medium-term annualised growth rates.

With this information, we find it odd that Osia Hyper Retail is trading at a P/E lower than the market. Apparently some shareholders are more bearish than recent times would indicate and have been accepting lower selling prices.

The Bottom Line On Osia Hyper Retail's P/E

Osia Hyper Retail's P/E looks about as weak as its stock price lately. We'd say the price-to-earnings ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

Our examination of Osia Hyper Retail revealed its three-year earnings trends aren't contributing to its P/E as much as we would have predicted, given they look similar to current market expectations. There could be some unobserved threats to earnings preventing the P/E ratio from matching the company's performance. It appears some are indeed anticipating earnings instability, because the persistence of these recent medium-term conditions should normally provide more support to the share price.

Having said that, be aware Osia Hyper Retail is showing 3 warning signs in our investment analysis, and 1 of those is potentially serious.

You might be able to find a better investment than Osia Hyper Retail. If you want a selection of possible candidates, check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.