The Market Lifts GeeCee Ventures Limited (NSE:GEECEE) Shares 29% But It Can Do More

GeeCee Ventures Limited (NSE:GEECEE) shareholders have had their patience rewarded with a 29% share price jump in the last month. The last month tops off a massive increase of 141% in the last year.

In spite of the firm bounce in price, given about half the companies in India have price-to-earnings ratios (or "P/E's") above 32x, you may still consider GeeCee Ventures as an attractive investment with its 20.5x P/E ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/E.

GeeCee Ventures certainly has been doing a great job lately as it's been growing earnings at a really rapid pace. It might be that many expect the strong earnings performance to degrade substantially, which has repressed the P/E. If that doesn't eventuate, then existing shareholders have reason to be quite optimistic about the future direction of the share price.

Check out our latest analysis for GeeCee Ventures

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

Is There Any Growth For GeeCee Ventures?

The only time you'd be truly comfortable seeing a P/E as low as GeeCee Ventures' is when the company's growth is on track to lag the market.

Taking a look back first, we see that the company grew earnings per share by an impressive 220% last year. The strong recent performance means it was also able to grow EPS by 263% 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 25% shows it's noticeably more attractive on an annualised basis.

With this information, we find it odd that GeeCee Ventures is trading at a P/E lower than the market. It looks like most investors are not convinced the company can maintain its recent growth rates.

The Bottom Line On GeeCee Ventures' P/E

The latest share price surge wasn't enough to lift GeeCee Ventures' P/E close to the market median. 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 GeeCee Ventures revealed its three-year earnings trends aren't contributing to its P/E anywhere near as much as we would have predicted, given they look better than current market expectations. There could be some major unobserved threats to earnings preventing the P/E ratio from matching this positive performance. At least price risks look to be very low if recent medium-term earnings trends continue, but investors seem to think future earnings could see a lot of volatility.

Having said that, be aware GeeCee Ventures is showing 4 warning signs in our investment analysis, and 1 of those is concerning.

Of course, you might find a fantastic investment by looking at a few good candidates. So take a peek at this free list of companies with a strong growth track record, trading on a low P/E.

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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.