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    NEOOTO CO., Ltd's (KOSDAQ:212560) Share Price Boosted 27% But Its Business Prospects Need A Lift Too

    Simply Wall St·12/10/2025 21:13:56
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    NEOOTO CO., Ltd (KOSDAQ:212560) shares have had a really impressive month, gaining 27% after a shaky period beforehand. Looking back a bit further, it's encouraging to see the stock is up 38% in the last year.

    Although its price has surged higher, given about half the companies in Korea have price-to-earnings ratios (or "P/E's") above 14x, you may still consider NEOOTO as a highly attractive investment with its 4.5x 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 limited.

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    As an illustration, earnings have deteriorated at NEOOTO over the last year, which is not ideal at all. It might be that many expect the disappointing earnings performance to continue or accelerate, which has repressed the P/E. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

    Check out our latest analysis for NEOOTO

    pe-multiple-vs-industry
    KOSDAQ:A212560 Price to Earnings Ratio vs Industry December 10th 2025
    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 NEOOTO's earnings, revenue and cash flow.

    What Are Growth Metrics Telling Us About The Low P/E?

    NEOOTO's P/E ratio would be typical for a company that's expected to deliver very poor growth or even falling earnings, and importantly, perform much worse than the market.

    If we review the last year of earnings, dishearteningly the company's profits fell to the tune of 6.0%. Still, the latest three year period has seen an excellent 92% overall rise in EPS, in spite of its unsatisfying short-term performance. Although it's been a bumpy ride, it's still fair to say the earnings growth recently has been more than adequate for the company.

    Comparing that to the market, which is predicted to deliver 38% growth in the next 12 months, the company's momentum is weaker based on recent medium-term annualised earnings results.

    In light of this, it's understandable that NEOOTO'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 Key Takeaway

    Even after such a strong price move, NEOOTO's P/E still trails the rest of the market significantly. Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

    We've established that NEOOTO maintains its low P/E on the weakness of its recent three-year growth being lower than the wider market forecast, as expected. At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio. Unless the recent medium-term conditions improve, they will continue to form a barrier for the share price around these levels.

    Before you settle on your opinion, we've discovered 2 warning signs for NEOOTO (1 is potentially serious!) that you should be aware of.

    If you're unsure about the strength of NEOOTO's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.