Not Many Are Piling Into Nupur Recyclers Limited (NSE:NRL) Just Yet

There wouldn't be many who think Nupur Recyclers Limited's (NSE:NRL) price-to-earnings (or "P/E") ratio of 21.5x is worth a mention when the median P/E in India is similar at about 20x. 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.

Recent times have been quite advantageous for Nupur Recyclers 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 Nupur Recyclers

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 Nupur Recyclers' earnings, revenue and cash flow.

Is There Some Growth For Nupur Recyclers?

The only time you'd be comfortable seeing a P/E like Nupur Recyclers' 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 143%. Pleasingly, EPS has also lifted 20,214% in aggregate from three years ago, thanks to the last 12 months of growth. Therefore, it's fair to say the earnings growth recently has been superb for the company.

Comparing that to the market, which is only predicted to deliver 24% growth in the next 12 months, the company's momentum is stronger based on recent medium-term annualised earnings results.

In light of this, it's curious that Nupur Recyclers' P/E sits in line with the majority of other companies. Apparently some shareholders believe the recent performance is at its limits and have been accepting lower selling prices.

What We Can Learn From Nupur Recyclers' P/E?

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.

Our examination of Nupur Recyclers revealed its three-year earnings trends aren't contributing to its P/E as much as we would have predicted, given they look better than current market expectations. 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.

Having said that, be aware Nupur Recyclers is showing 3 warning signs in our investment analysis, you should know about.

Of course, you might also be able to find a better stock than Nupur Recyclers. So you may wish to see this free collection of other companies that sit on P/E's below 20x 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.