Investors Appear Satisfied With Mirae Asset Securities Co., Ltd.'s (KRX:006800) Prospects

With a price-to-earnings (or "P/E") ratio of 15.8x Mirae Asset Securities Co., Ltd. (KRX:006800) may be sending bearish signals at the moment, given that almost half of all companies in Korea have P/E ratios under 11x and even P/E's lower than 6x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the elevated P/E.

Mirae Asset Securities could be doing better as its earnings have been going backwards lately while most other companies have been seeing positive earnings growth. One possibility is that the P/E is high because investors think this poor earnings performance will turn the corner. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

View our latest analysis for Mirae Asset Securities

Keen to find out how analysts think Mirae Asset Securities' future stacks up against the industry? In that case, our free report is a great place to start.

How Is Mirae Asset Securities' Growth Trending?

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

Retrospectively, the last year delivered a frustrating 47% decrease to the company's bottom line. The last three years don't look nice either as the company has shrunk EPS by 72% in aggregate. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.

Shifting to the future, estimates from the eleven analysts covering the company suggest earnings should grow by 194% over the next year. With the market only predicted to deliver 33%, the company is positioned for a stronger earnings result.

In light of this, it's understandable that Mirae Asset Securities' 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.

What We Can Learn From Mirae Asset Securities' P/E?

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 Mirae Asset Securities 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. It's hard to see the share price falling strongly in the near future under these circumstances.

There are also other vital risk factors to consider and we've discovered 4 warning signs for Mirae Asset Securities (2 are potentially serious!) that you should be aware of before investing here.

If you're unsure about the strength of Mirae Asset Securities' 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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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.