Subdued Growth No Barrier To Protagonist Therapeutics, Inc. (NASDAQ:PTGX) With Shares Advancing 27%

Protagonist Therapeutics, Inc. (NASDAQ:PTGX) shareholders would be excited to see that the share price has had a great month, posting a 27% gain and recovering from prior weakness. Looking back a bit further, it's encouraging to see the stock is up 64% in the last year.

After such a large jump in price, given close to half the companies in the United States have price-to-earnings ratios (or "P/E's") below 17x, you may consider Protagonist Therapeutics as a stock to avoid entirely with its 62.1x P/E ratio. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's so lofty.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Protagonist Therapeutics hasn't been tracking well recently as its declining earnings compare poorly to other companies, which have seen some growth on average. It might be that many expect the dour earnings performance to recover substantially, which has kept the P/E from collapsing. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

View our latest analysis for Protagonist Therapeutics

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Protagonist Therapeutics.

How Is Protagonist Therapeutics' Growth Trending?

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

Retrospectively, the last year delivered a frustrating 67% decrease to the company's bottom line. Unfortunately, that's brought it right back to where it started three years ago with EPS growth being virtually non-existent overall during that time. Therefore, it's fair to say that earnings growth has been inconsistent recently for the company.

What We Can Learn From Protagonist Therapeutics' P/E?

Shares in Protagonist Therapeutics have built up some good momentum lately, which has really inflated its P/E. We'd say the price-to-earnings ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

You should always think about risks. Case in point, we've spotted 1 warning sign for Protagonist Therapeutics you should be aware of.

If these risks are making you reconsider your opinion on Protagonist Therapeutics, explore our interactive list of high quality stocks to get an idea of what else is out there.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.