of China Electronics Huada Technology Co., Ltd. (HKG:85) The stock price has fallen a significant 25% over the past 30 days, recouping much of the stock's recent gains. Long-term shareholders will bemoan the decline, as the stock has been largely flat this year after several promising quarters.

After such a large price decline, China Electronics Huada Technology is very attractive at 3.9 times, considering that about half of Hong Kong companies have a price-to-earnings ratio (or “P/E”) of more than 10 times. It can be considered as a good investment destination. P.E.R. However, it would be unwise to take the P/E ratio at face value, as there may be an explanation as to why it is so limited.

China Electronics Huada Technology is doing well, with profits growing at a steady pace recently. Perhaps many are expecting a significant deterioration in the respectable performance, and that may be pushing down the P/E ratio. Even if that doesn't happen, existing shareholders have reason to be optimistic about the future direction of the stock price.

Check out our latest analysis for China Electronics Huada Technology.

SEHK:85 Price Earnings Ratio vs. Industry April 14, 2024

There are no analyst forecasts available for China Electronics Huada Technology, but take a look at this. free Data-rich visualizations show how a company's revenue, revenue, and cash flow stack up.

What is the growth trend of China Electronics Huada Technology?

To justify China Electronics Huada's P/E ratio, it would need to deliver poor growth well below the market.

Looking back, the company saw its revenue grow by an exceptional 29% last year. However, his last three years haven't been all that great as he hasn't shown any growth. Therefore, shareholders would not have been too happy with the unstable medium-term growth rate.

This is in contrast to the rest of the market, which is expected to grow by 21% over the next 12 months, significantly higher than the company's recent medium-term annual growth rate.

This information helps explain why China Electronics Huada Technology is trading at a lower P/E than the market. Most investors expect the recent limited growth rate to continue into the future and appear to be willing to pay only a reduced amount for the stock.

What can we learn from China Electronics Huada Technology's PER?

China Electronics Huada Technology's stock price, which was on the verge of falling off a cliff, also saw its P/E ratio drop significantly. It has been argued that the price-to-earnings ratio is a poor measure of value in certain industries, but can be a powerful indicator of business confidence.

As we suspected, our review of China Electronics Huada Technology shows that the company's three-year earnings trend is contributing to its low P/E ratio, as it looks worse than current market expectations. It became clear that there was. For now, shareholders are accepting the low P/E ratio as they accept that future earnings probably won't come as a pleasant surprise. If the current medium-term earnings trend continues, it is unlikely that the stock price will rise significantly in the near future under these circumstances.

It turns out there are other important risk factors to consider before investing. 1 warning sign for China Electronics Huada Technology What you need to know.

If you are interested in P/E ratioyou might want to see this free A collection of other companies with high earnings growth and low P/E ratios.

Valuation is complex, but we help make it simple.

Check out our comprehensive analysis, including below, to see if China Electronics Huada Technology is potentially overvalued or undervalued. Fair value estimates, risks and caveats, dividends, insider trading, and financial health.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, and the articles are not intended as financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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