Investors Appear Satisfied With Okeanis Eco Tankers Corp.'s (OB:OET) Prospects As Shares Rocket 30%

Okeanis Eco Tankers Corp. (OB:OET) shares have continued their recent momentum with a 30% gain in the last month alone. The last month tops off a massive increase of 127% in the last year.

Following the firm bounce in price, given close to half the companies in Norway have price-to-earnings ratios (or "P/E's") below 12x, you may consider Okeanis Eco Tankers as a stock to avoid entirely with its 36.6x P/E ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/E.

Okeanis Eco Tankers 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.

Our analysis indicates that OET is potentially undervalued!

Want the full picture on analyst estimates for the company? Then our free report on Okeanis Eco Tankers will help you uncover what's on the horizon.

Is There Enough Growth For Okeanis Eco Tankers?

The only time you'd be truly comfortable seeing a P/E as steep as Okeanis Eco Tankers' is when the company's growth is on track to outshine the market decidedly.

Retrospectively, the last year delivered a frustrating 24% decrease to the company's bottom line. Even so, admirably EPS has lifted 50% in aggregate from three years ago, notwithstanding the last 12 months. So we can start by confirming that the company has generally done a very good job of growing earnings over that time, even though it had some hiccups along the way.

Looking ahead now, EPS is anticipated to climb by 371% during the coming year according to the dual analysts following the company. That's shaping up to be materially higher than the 24% growth forecast for the broader market.

In light of this, it's understandable that Okeanis Eco Tankers' 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 Okeanis Eco Tankers' P/E?

Okeanis Eco Tankers' P/E is flying high just like its stock has during the last month. 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.

We've established that Okeanis Eco Tankers 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.

Don't forget that there may be other risks. For instance, we've identified 2 warning signs for Okeanis Eco Tankers (1 is a bit concerning) you should be aware of.

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 P/E ratio below 20x).

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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.