This is the risk and reward story for Tofflon Science and Technology Group Co., Ltd. ( SZSE:300171 ).

Price/Earnings Ratio: 25x Teflon Science and Technology Group Co., Ltd. Considering that almost half of Chinese companies have P/E ratios above 32x, and P/Es above 60x are not uncommon, SZSE:300171 may be sending out a bullish signal at the moment, however it would be unwise to take the P/E at face value as this could explain why the P/E is limited.

Teflon Science and Technology Group has performed poorly recently, with earnings declining compared to peers that are, on average, experiencing moderate growth. Many seem to expect the slump in earnings to continue, which is pushing down the stock's price-to-earnings multiple. If this is the case, existing shareholders will have a hard time getting excited about the future performance of the stock.

Check out our latest analysis for Teflon Scientific and Technology Group

If you want to know what analysts are predicting for the future, check out our free Report on Teflon Science and Technology Group.

Is there growth for Teflon Technology Group?

Tofflon Science and Technology Group's P/E ratio is typical for a company that is expected to have limited growth and, importantly, underperform the market.

Looking back, last year was a disappointing 56% drop in the company's bottom line, and as a result, profits three years ago were down 32% overall, so unfortunately we have to admit that the company hasn't done very well in terms of growing profits over this period.

Looking ahead, EPS is expected to grow 130% over the next 12 months according to the three analysts who track the company, while the rest of the market is only expected to expand 38%, making it significantly less attractive.

Given this information, it seems odd that Teflon Science and Technology Group's P/E ratio is lower than the market, as most investors simply aren't convinced the company can deliver on its future growth expectations.

The last word

While the price-to-earnings ratio is not a deciding factor in whether or not to buy a stock, it is a very useful barometer for gauging earnings expectations.

We found that Teflon Science and Technology Group's current price-to-earnings multiple is trading at a much lower level than expected, as its expected growth rate is higher than the broader market. When you see a strong earnings outlook with a faster-than-market growth rate, you might think that potential risks could be putting a lot of pressure on the price-to-earnings multiple. While price risk at the very least seems very low, it seems investors are thinking that we could see big fluctuations in future earnings.

Before proceeding to the next step, 3 warning signs for Teflon Science and Technology Group (Number 1 is a bit unsettling!) Here's what we discovered.

of course, You might also be able to find a better stock than Teflon Science and Technology GroupSo you might want to take a look at this free A collection of other companies with reasonable P/E ratios and strong earnings growth.

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