Stock Analysis

Little Excitement Around Lindeman Asia Investment Co., Ltd.'s (KOSDAQ:277070) Earnings

KOSDAQ:A277070
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When close to half the companies in Korea have price-to-earnings ratios (or "P/E's") above 20x, you may consider Lindeman Asia Investment Co., Ltd. (KOSDAQ:277070) as an attractive investment with its 15.5x P/E ratio. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's limited.

The earnings growth achieved at Lindeman Asia Investment over the last year would be more than acceptable for most companies. It might be that many expect the respectable earnings performance to degrade substantially, which has repressed the P/E. 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 Lindeman Asia Investment

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KOSDAQ:A277070 Price Based on Past Earnings January 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 Lindeman Asia Investment's earnings, revenue and cash flow.

How Is Lindeman Asia Investment's Growth Trending?

Lindeman Asia Investment'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 a decent 15% gain to the company's bottom line. This was backed up an excellent period prior to see EPS up by 47% in total over the last three years. So we can start by confirming that the company has done a great job of growing earnings over that time.

Weighing that recent medium-term earnings trajectory against the broader market's one-year forecast for expansion of 42% shows it's noticeably less attractive on an annualised basis.

In light of this, it's understandable that Lindeman Asia Investment's P/E sits below the majority of other companies. It seems most investors are expecting to see the recent limited growth rates continue into the future and are only willing to pay a reduced amount for the stock.

The Key Takeaway

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.

We've established that Lindeman Asia Investment maintains its low P/E on the weakness of its recentthree-year growth being lower than the wider market forecast, as expected. At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio. Unless the recent medium-term conditions improve, they will continue to form a barrier for the share price around these levels.

Before you settle on your opinion, we've discovered 3 warning signs for Lindeman Asia Investment (1 shouldn't be ignored!) that you should be aware of.

If you're unsure about the strength of Lindeman Asia Investment's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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

Find out whether Lindeman Asia Investment 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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