IMINT Image Intelligence AB (publ.) (NGM:IMINT) Not Doing Enough For Some Investors As Its Shares Slump 25%

IMINT Image Intelligence AB (publ.) (NGM:IMINT) shareholders that were waiting for something to happen have been dealt a blow with a 25% share price drop in the last month. For any long-term shareholders, the last month ends a year to forget by locking in a 66% share price decline.

Following the heavy fall in price, given close to half the companies in Sweden have price-to-earnings ratios (or "P/E's") above 17x, you may consider IMINT Image Intelligence AB (publ.) as an attractive investment with its 9.7x P/E ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/E.

Recent times have been quite advantageous for IMINT Image Intelligence AB (publ.) as its earnings have been rising very briskly. One possibility is that the P/E is low because investors think this strong earnings growth might actually underperform the broader market in the near future. If that doesn't eventuate, then existing shareholders have reason to be quite optimistic about the future direction of the share price.

See our latest analysis for IMINT Image Intelligence AB (publ.)

We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on IMINT Image Intelligence AB (publ.)'s earnings, revenue and cash flow.

Is There Any Growth For IMINT Image Intelligence AB (publ.)?

There's an inherent assumption that a company should underperform the market for P/E ratios like IMINT Image Intelligence AB (publ.)'s to be considered reasonable.

If we review the last year of earnings growth, the company posted a terrific increase of 85%. Still, EPS has barely risen at all from three years ago in total, which is not ideal. So it appears to us that the company has had a mixed result in terms of growing earnings over that time.

Weighing that recent medium-term earnings trajectory against the broader market's one-year forecast for expansion of 17% shows it's noticeably less attractive on an annualised basis.

In light of this, it's understandable that IMINT Image Intelligence AB (publ.)'s P/E sits below the majority of other companies. It seems most investors are expecting to see the recent limited growth rates continue into the future and are only willing to pay a reduced amount for the stock.

The Final Word

IMINT Image Intelligence AB (publ.)'s recently weak share price has pulled its P/E below most other companies. 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.

As we suspected, our examination of IMINT Image Intelligence AB (publ.) revealed its three-year earnings trends are contributing to its low P/E, given they look worse than current market expectations. Right now shareholders are accepting the low P/E as they concede future earnings probably won't provide any pleasant surprises. Unless the recent medium-term conditions improve, they will continue to form a barrier for the share price around these levels.

It is also worth noting that we have found 1 warning sign for IMINT Image Intelligence AB (publ.) that you need to take into consideration.

You might be able to find a better investment than IMINT Image Intelligence AB (publ.). If you want a selection of possible candidates, check out this free list of interesting companies that trade on a P/E below 20x (but have proven they can grow earnings).

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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.