Yoshimura Food Holdings K.K.'s (TSE:2884) Share Price Is Still Matching Investor Opinion Despite 25% Slump

Yoshimura Food Holdings K.K. (TSE:2884) shareholders that were waiting for something to happen have been dealt a blow with a 25% share price drop in the last month. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 14% share price drop.

Although its price has dipped substantially, you could still be forgiven for feeling indifferent about Yoshimura Food Holdings K.K's P/E ratio of 14.4x, since the median price-to-earnings (or "P/E") ratio in Japan is also close to 14x. While this might not raise any eyebrows, if the P/E ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

With earnings growth that's superior to most other companies of late, Yoshimura Food Holdings K.K has been doing relatively well. One possibility is that the P/E is moderate because investors think this strong earnings performance might be about to tail off. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

View our latest analysis for Yoshimura Food Holdings K.K

Keen to find out how analysts think Yoshimura Food Holdings K.K's future stacks up against the industry? In that case, our free report is a great place to start.

How Is Yoshimura Food Holdings K.K's Growth Trending?

The only time you'd be comfortable seeing a P/E like Yoshimura Food Holdings K.K's is when the company's growth is tracking the market closely.

Taking a look back first, we see that the company grew earnings per share by an impressive 198% last year. The strong recent performance means it was also able to grow EPS by 196% in total over the last three years. Therefore, it's fair to say the earnings growth recently has been superb for the company.

Looking ahead now, EPS is anticipated to climb by 14% during the coming year according to the lone analyst following the company. With the market predicted to deliver 12% growth , the company is positioned for a comparable earnings result.

With this information, we can see why Yoshimura Food Holdings K.K is trading at a fairly similar P/E to the market. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

The Bottom Line On Yoshimura Food Holdings K.K's P/E

Yoshimura Food Holdings K.K's plummeting stock price has brought its P/E right back to the rest of the market. Using the price-to-earnings ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

As we suspected, our examination of Yoshimura Food Holdings K.K's analyst forecasts revealed that its market-matching earnings outlook is contributing to its current P/E. At this stage investors feel the potential for an improvement or deterioration in earnings isn't great enough to justify a high or low P/E ratio. It's hard to see the share price moving strongly in either direction in the near future under these circumstances.

Plus, you should also learn about these 2 warning signs we've spotted with Yoshimura Food Holdings K.K.

If these risks are making you reconsider your opinion on Yoshimura Food Holdings K.K, explore our interactive list of high quality stocks to get an idea of what else is out there.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.