Last One Mile Co.,Ltd. (TSE:9252) Stocks Shoot Up 26% But Its P/E Still Looks Reasonable

Those holding Last One Mile Co.,Ltd. (TSE:9252) shares would be relieved that the share price has rebounded 26% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. The last month tops off a massive increase of 102% in the last year.

After such a large jump in price, Last One MileLtd's price-to-earnings (or "P/E") ratio of 34.8x might make it look like a strong sell right now compared to the market in Japan, where around half of the companies have P/E ratios below 14x and even P/E's below 10x 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 so lofty.

With earnings growth that's exceedingly strong of late, Last One MileLtd has been doing very well. It seems that many are expecting the strong earnings performance to beat most other companies over the coming period, which has increased investors’ willingness to pay up for the stock. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

View our latest analysis for Last One MileLtd

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 Last One MileLtd's earnings, revenue and cash flow.

How Is Last One MileLtd's Growth Trending?

There's an inherent assumption that a company should far outperform the market for P/E ratios like Last One MileLtd's to be considered reasonable.

If we review the last year of earnings growth, the company posted a terrific increase of 337%. The latest three year period has also seen an excellent 1,467% 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.

This is in contrast to the rest of the market, which is expected to grow by 11% over the next year, materially lower than the company's recent medium-term annualised growth rates.

In light of this, it's understandable that Last One MileLtd's P/E sits above the majority of other companies. It seems most investors are expecting this strong growth to continue and are willing to pay more for the stock.

The Bottom Line On Last One MileLtd's P/E

The strong share price surge has got Last One MileLtd's P/E rushing to great heights as well. It's argued the price-to-earnings ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

We've established that Last One MileLtd maintains its high P/E on the strength of its recent three-year growth being higher than the wider market forecast, as expected. Right now shareholders are comfortable with the P/E as they are quite confident earnings aren't under threat. Unless the recent medium-term conditions change, they will continue to provide strong support to the share price.

Before you take the next step, you should know about the 3 warning signs for Last One MileLtd that we have uncovered.

If you're unsure about the strength of Last One MileLtd's 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.