Earnings Working Against Mirae Asset Venture Investment Co., Ltd.'s (KOSDAQ:100790) Share Price

When close to half the companies in Korea have price-to-earnings ratios (or "P/E's") above 15x, you may consider Mirae Asset Venture Investment Co., Ltd. (KOSDAQ:100790) as an attractive investment with its 9.5x P/E ratio. However, the P/E might be low for a reason and it requires further investigation to determine if it's justified.

As an illustration, earnings have deteriorated at Mirae Asset Venture Investment over the last year, which is not ideal at all. One possibility is that the P/E is low because investors think the company won't do enough to avoid underperforming 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.

See our latest analysis for Mirae Asset Venture Investment

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 Mirae Asset Venture Investment's earnings, revenue and cash flow.

How Is Mirae Asset Venture Investment's Growth Trending?

The only time you'd be truly comfortable seeing a P/E as low as Mirae Asset Venture Investment's is when the company's growth is on track to lag the market.

Retrospectively, the last year delivered a frustrating 62% decrease to the company's bottom line. Even so, admirably EPS has lifted 76% in aggregate from three years ago, notwithstanding the last 12 months. Although it's been a bumpy ride, it's still fair to say the earnings growth recently has been more than adequate for the company.

Weighing that recent medium-term earnings trajectory against the broader market's one-year forecast for expansion of 37% shows it's noticeably less attractive on an annualised basis.

In light of this, it's understandable that Mirae Asset Venture Investment's P/E sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on to something they believe will continue to trail the bourse.

The Bottom Line On Mirae Asset Venture Investment's P/E

Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

As we suspected, our examination of Mirae Asset Venture Investment revealed its three-year earnings trends are contributing to its low P/E, given they look worse than current market expectations. At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio. If recent medium-term earnings trends continue, it's hard to see the share price rising strongly in the near future under these circumstances.

It's always necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Mirae Asset Venture Investment, and understanding should be part of your investment process.

It's important to make sure you look for a great company, not just the first idea you come across. So take a peek at this free list of interesting companies with strong recent earnings growth (and 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.