Investors Give Shin Heung Energy & Electronics Co.,Ltd. (KOSDAQ:243840) Shares A 28% Hiding

The Shin Heung Energy & Electronics Co.,Ltd. (KOSDAQ:243840) share price has fared very poorly over the last month, falling by a substantial 28%. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 25% in that time.

After such a large drop in price, Shin Heung Energy & ElectronicsLtd's price-to-earnings (or "P/E") ratio of 7.9x might make it look like a buy right now compared to the market in Korea, where around half of the companies have P/E ratios above 11x and even P/E's above 21x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/E.

With earnings growth that's superior to most other companies of late, Shin Heung Energy & ElectronicsLtd has been doing relatively well. It might be that many expect the strong earnings performance to degrade substantially, which has repressed the P/E. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.

View our latest analysis for Shin Heung Energy & ElectronicsLtd

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Shin Heung Energy & ElectronicsLtd.

How Is Shin Heung Energy & ElectronicsLtd's Growth Trending?

In order to justify its P/E ratio, Shin Heung Energy & ElectronicsLtd would need to produce sluggish growth that's trailing the market.

Taking a look back first, we see that the company grew earnings per share by an impressive 55% last year. However, this wasn't enough as the latest three year period has seen a very unpleasant 4.8% drop in EPS in aggregate. Accordingly, shareholders would have felt downbeat about the medium-term rates of earnings growth.

Turning to the outlook, the next three years should generate growth of 13% per annum as estimated by the two analysts watching the company. That's shaping up to be similar to the 15% each year growth forecast for the broader market.

In light of this, it's peculiar that Shin Heung Energy & ElectronicsLtd's P/E sits below the majority of other companies. Apparently some shareholders are doubtful of the forecasts and have been accepting lower selling prices.

The Bottom Line On Shin Heung Energy & ElectronicsLtd's P/E

Shin Heung Energy & ElectronicsLtd's recently weak share price has pulled its P/E below most other companies. 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.

We've established that Shin Heung Energy & ElectronicsLtd currently trades on a lower than expected P/E since its forecast growth is in line with the wider market. There could be some unobserved threats to earnings preventing the P/E ratio from matching the outlook. At least the risk of a price drop looks to be subdued, but investors seem to think future earnings could see some volatility.

You need to take note of risks, for example - Shin Heung Energy & ElectronicsLtd has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.

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.