Stock Analysis

Market Might Still Lack Some Conviction On WINIADIMCHAE Co.,Ltd. (KOSDAQ:071460) Even After 35% Share Price Boost

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WINIADIMCHAE Co.,Ltd. (KOSDAQ:071460) shares have continued their recent momentum with a 35% gain in the last month alone. The last 30 days bring the annual gain to a very sharp 76%.

Even after such a large jump in price, WINIADIMCHAELtd may still be sending bullish signals at the moment with its price-to-earnings (or "P/E") ratio of 11.2x, since almost half of all companies in Korea have P/E ratios greater than 21x and even P/E's higher than 45x 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 limited.

With earnings growth that's exceedingly strong of late, WINIADIMCHAELtd has been doing very well. One possibility is that the P/E is low because investors think this strong earnings growth might actually underperform the broader market in the near future. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

Check out our latest analysis for WINIADIMCHAELtd

KOSDAQ:A071460 Price Based on Past Earnings April 5th 2021
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 WINIADIMCHAELtd's earnings, revenue and cash flow.

Does Growth Match The Low P/E?

WINIADIMCHAELtd's P/E ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the market.

Retrospectively, the last year delivered an exceptional 167% gain to the company's bottom line. The strong recent performance means it was also able to grow EPS by 208% in total over the last three years. Therefore, it's fair to say the earnings growth recently has been superb for the company.

It's interesting to note that the rest of the market is similarly expected to grow by 47% over the next year, which is fairly even with the company's recent medium-term annualised growth rates.

With this information, we find it odd that WINIADIMCHAELtd is trading at a P/E lower than the market. Apparently some shareholders are more bearish than recent times would indicate and have been accepting lower selling prices.

The Bottom Line On WINIADIMCHAELtd's P/E

WINIADIMCHAELtd's stock might have been given a solid boost, but its P/E certainly hasn't reached any great heights. 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 WINIADIMCHAELtd currently trades on a lower than expected P/E since its recent three-year growth is in line with the wider market forecast. When we see average earnings with market-like growth, we assume potential risks are what might be placing pressure on the P/E ratio. At least the risk of a price drop looks to be subdued if recent medium-term earnings trends continue, but investors seem to think future earnings could see some volatility.

You should always think about risks. Case in point, we've spotted 3 warning signs for WINIADIMCHAELtd you should be aware of, and 1 of them is a bit concerning.

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

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Valuation is complex, but we're helping make it simple.

Find out whether WINIA is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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This article by Simply Wall St is general in nature. 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.
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