SNT Energy Co., Ltd.'s (KRX:100840) Share Price Is Still Matching Investor Opinion Despite 27% Slump

SNT Energy Co., Ltd. (KRX:100840) shares have had a horrible month, losing 27% after a relatively good period beforehand. Of course, over the longer-term many would still wish they owned shares as the stock's price has soared 183% in the last twelve months.

In spite of the heavy fall in price, SNT Energy may still be sending very bearish signals at the moment with a price-to-earnings (or "P/E") ratio of 21.8x, since almost half of all companies in Korea have P/E ratios under 14x and even P/E's lower than 7x are not unusual. 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.

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SNT Energy certainly has been doing a good job lately as its earnings growth has been positive while most other companies have been seeing their earnings go backwards. The P/E is probably high because investors think the company will continue to navigate the broader market headwinds better than most. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

Check out our latest analysis for SNT Energy

Want the full picture on analyst estimates for the company? Then our free report on SNT Energy will help you uncover what's on the horizon.

How Is SNT Energy's Growth Trending?

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

Taking a look back first, we see that the company grew earnings per share by an impressive 60% last year. The latest three year period has also seen an excellent 601% overall rise in EPS, aided by its short-term performance. So we can start by confirming that the company has done a great job of growing earnings over that time.

Shifting to the future, estimates from the five analysts covering the company suggest earnings should grow by 36% each year over the next three years. With the market only predicted to deliver 21% per annum, the company is positioned for a stronger earnings result.

In light of this, it's understandable that SNT Energy's P/E sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Bottom Line On SNT Energy's P/E

A significant share price dive has done very little to deflate SNT Energy's very lofty P/E. 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.

We've established that SNT Energy maintains its high P/E on the strength of its forecast growth being higher than the wider market, as expected. At this stage investors feel the potential for a deterioration in earnings isn't great enough to justify a lower P/E ratio. Unless these conditions change, they will continue to provide strong support to the share price.

And what about other risks? Every company has them, and we've spotted 1 warning sign for SNT Energy you should know about.

You might be able to find a better investment than SNT Energy. If you want a selection of possible candidates, check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.