The Market Lifts Automatyka-Pomiary-Sterowanie S.A. (WSE:APS) Shares 26% But It Can Do More

Despite an already strong run, Automatyka-Pomiary-Sterowanie S.A. (WSE:APS) shares have been powering on, with a gain of 26% in the last thirty days. The last month tops off a massive increase of 123% in the last year.

In spite of the firm bounce in price, Automatyka-Pomiary-Sterowanie's price-to-earnings (or "P/E") ratio of 4.3x might still make it look like a strong buy right now compared to the market in Poland, where around half of the companies have P/E ratios above 14x and even P/E's above 26x are quite common. However, the P/E might be quite low for a reason and it requires further investigation to determine if it's justified.

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With earnings growth that's exceedingly strong of late, Automatyka-Pomiary-Sterowanie has been doing very well. It might be that many expect the strong 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.

View our latest analysis for Automatyka-Pomiary-Sterowanie

Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Automatyka-Pomiary-Sterowanie will help you shine a light on its historical performance.

How Is Automatyka-Pomiary-Sterowanie's Growth Trending?

Automatyka-Pomiary-Sterowanie's P/E ratio would be typical for a company that's expected to deliver very poor growth or even falling earnings, and importantly, perform much worse than the market.

If we review the last year of earnings growth, the company posted a terrific increase of 299%. The strong recent performance means it was also able to grow EPS by 923% in total over the last three years. Therefore, it's fair to say the earnings growth recently has been superb for the company.

Comparing that to the market, which is only predicted to deliver 17% growth in the next 12 months, the company's momentum is stronger based on recent medium-term annualised earnings results.

In light of this, it's peculiar that Automatyka-Pomiary-Sterowanie's P/E sits below the majority of other companies. It looks like most investors are not convinced the company can maintain its recent growth rates.

The Key Takeaway

Automatyka-Pomiary-Sterowanie's recent share price jump still sees its P/E sitting firmly flat on the ground. 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.

Our examination of Automatyka-Pomiary-Sterowanie revealed its three-year earnings trends aren't contributing to its P/E anywhere near as much as we would have predicted, given they look better than current market expectations. When we see strong earnings with faster-than-market growth, we assume potential risks are what might be placing significant pressure on the P/E ratio. At least price risks look to be very low if recent medium-term earnings trends continue, but investors seem to think future earnings could see a lot of volatility.

You should always think about risks. Case in point, we've spotted 3 warning signs for Automatyka-Pomiary-Sterowanie you should be aware of, and 1 of them is potentially serious.

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.