Swift Energy Technology Berhad's (KLSE:SET) Popularity With Investors Under Threat As Stock Sinks 26%

Unfortunately for some shareholders, the Swift Energy Technology Berhad (KLSE:SET) share price has dived 26% in the last thirty days, prolonging recent pain. To make matters worse, the recent drop has wiped out a year's worth of gains with the share price now back where it started a year ago.

In spite of the heavy fall in price, there still wouldn't be many who think Swift Energy Technology Berhad's price-to-earnings (or "P/E") ratio of 12.8x is worth a mention when the median P/E in Malaysia is similar at about 14x. Although, it's not wise to simply ignore the P/E without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

We've discovered 2 warning signs about Swift Energy Technology Berhad. View them for free.

Swift Energy Technology Berhad certainly has been doing a good job lately as it's been growing earnings more than most other companies. It might be that many expect the strong earnings performance to wane, which has kept the P/E from rising. 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 not quite in favour.

View our latest analysis for Swift Energy Technology Berhad

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Swift Energy Technology Berhad.

How Is Swift Energy Technology Berhad's Growth Trending?

The only time you'd be comfortable seeing a P/E like Swift Energy Technology Berhad's is when the company's growth is tracking the market closely.

Retrospectively, the last year delivered an exceptional 39% gain to the company's bottom line. Despite this strong recent growth, it's still struggling to catch up as its three-year EPS frustratingly shrank by 99% overall. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.

Looking ahead now, EPS is anticipated to slump, contracting by 100% during the coming year according to the three analysts following the company. That's not great when the rest of the market is expected to grow by 14%.

In light of this, it's somewhat alarming that Swift Energy Technology Berhad's P/E sits in line with the majority of other companies. Apparently many investors in the company reject the analyst cohort's pessimism and aren't willing to let go of their stock right now. There's a good chance these shareholders are setting themselves up for future disappointment if the P/E falls to levels more in line with the negative growth outlook.

The Final Word

Following Swift Energy Technology Berhad's share price tumble, its P/E is now hanging on to the median market 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.

Our examination of Swift Energy Technology Berhad's analyst forecasts revealed that its outlook for shrinking earnings isn't impacting its P/E as much as we would have predicted. When we see a poor outlook with earnings heading backwards, we suspect share price is at risk of declining, sending the moderate P/E lower. This places shareholders' investments at risk and potential investors in danger of paying an unnecessary premium.

You always need to take note of risks, for example - Swift Energy Technology Berhad has 2 warning signs we think you should be aware of.

Of course, you might find a fantastic investment by looking at a few good candidates. So take a peek at this free list of companies with a strong growth track record, trading on 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.