Potential Upside For Financial Partners Group Co.,Ltd. (TSE:7148) Not Without Risk

When close to half the companies in Japan have price-to-earnings ratios (or "P/E's") above 15x, you may consider Financial Partners Group Co.,Ltd. (TSE:7148) as an attractive investment with its 10.7x P/E ratio. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's limited.

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Financial Partners GroupLtd could be doing better as its earnings have been going backwards lately while most other companies have been seeing positive earnings growth. It seems that many are expecting the dour earnings performance to persist, which has repressed the P/E. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

View our latest analysis for Financial Partners GroupLtd

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Financial Partners GroupLtd.

Is There Any Growth For Financial Partners GroupLtd?

There's an inherent assumption that a company should underperform the market for P/E ratios like Financial Partners GroupLtd's to be considered reasonable.

Retrospectively, the last year delivered a frustrating 3.6% decrease to the company's bottom line. Even so, admirably EPS has lifted 166% in aggregate from three years ago, notwithstanding the last 12 months. Accordingly, while they would have preferred to keep the run going, shareholders would probably welcome the medium-term rates of earnings growth.

Looking ahead now, EPS is anticipated to climb by 46% during the coming year according to the lone analyst following the company. With the market only predicted to deliver 11%, the company is positioned for a stronger earnings result.

With this information, we find it odd that Financial Partners GroupLtd is trading at a P/E lower than the market. It looks like most investors are not convinced at all that the company can achieve future growth expectations.

The Bottom Line On Financial Partners GroupLtd's P/E

Generally, our preference is to limit the use of the price-to-earnings ratio to establishing what the market thinks about the overall health of a company.

Our examination of Financial Partners GroupLtd's analyst forecasts revealed that its superior earnings outlook isn't contributing to its P/E anywhere near as much as we would have predicted. When we see a strong earnings outlook with faster-than-market growth, we assume potential risks are what might be placing significant pressure on the P/E ratio. At least price risks look to be very low, but investors seem to think future earnings could see a lot of volatility.

You should always think about risks. Case in point, we've spotted 2 warning signs for Financial Partners GroupLtd you should be aware of, and 1 of them doesn't sit too well with us.

If P/E ratios interest you, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

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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.