Market Participants Recognise Planet B2B S.A.'s (WSE:P2B) Earnings Pushing Shares 28% Higher

Despite an already strong run, Planet B2B S.A. (WSE:P2B) shares have been powering on, with a gain of 28% in the last thirty days. Looking back a bit further, it's encouraging to see the stock is up 38% in the last year.

Since its price has surged higher, Planet B2B's price-to-earnings (or "P/E") ratio of 15.5x might make it look like a sell right now compared to the market in Poland, where around half of the companies have P/E ratios below 13x and even P/E's below 7x are quite common. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's as high as it is.

We've discovered 4 warning signs about Planet B2B. View them for free.

Planet B2B certainly has been doing a great job lately as it's been growing earnings at a really rapid pace. The P/E is probably high because investors think this strong earnings growth will be enough to outperform the broader market in the near future. If not, then existing shareholders might be a little nervous about the viability of the share price.

View our latest analysis for Planet B2B

Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Planet B2B will help you shine a light on its historical performance.

How Is Planet B2B's Growth Trending?

In order to justify its P/E ratio, Planet B2B would need to produce impressive growth in excess of the market.

Taking a look back first, we see that the company grew earnings per share by an impressive 174% last year. The strong recent performance means it was also able to grow EPS by 189% 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 13% shows it's noticeably more attractive on an annualised basis.

With this information, we can see why Planet B2B is trading at such a high P/E compared to the market. Presumably shareholders aren't keen to offload something they believe will continue to outmanoeuvre the bourse.

What We Can Learn From Planet B2B's P/E?

Planet B2B's P/E is getting right up there since its shares have risen strongly. 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 Planet B2B maintains its high P/E on the strength of its recent three-year growth being higher than the wider market forecast, as expected. Right now shareholders are comfortable with the P/E as they are quite confident earnings aren't under threat. Unless the recent medium-term conditions change, they will continue to provide strong support to the share price.

And what about other risks? Every company has them, and we've spotted 4 warning signs for Planet B2B (of which 3 are a bit concerning!) you should know about.

Of course, you might also be able to find a better stock than Planet B2B. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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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.