Nasdaq
华尔街日报Atreyu Capital Markets Ltd (TLV:ATRY) Surges 26% Yet Its Low P/E Is No Reason For Excitement
Atreyu Capital Markets Ltd (TLV:ATRY) shareholders have had their patience rewarded with a 26% share price jump in the last month. The last 30 days bring the annual gain to a very sharp 34%.
In spite of the firm bounce in price, Atreyu Capital Markets may still be sending bullish signals at the moment with its price-to-earnings (or "P/E") ratio of 13.3x, since almost half of all companies in Israel have P/E ratios greater than 16x and even P/E's higher than 27x are not unusual. However, the P/E might be low for a reason and it requires further investigation to determine if it's justified.
Atreyu Capital Markets has been doing a good job lately as it's been growing earnings at a solid pace. It might be that many expect the respectable earnings performance to degrade substantially, 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.
See our latest analysis for Atreyu Capital Markets
How Is Atreyu Capital Markets' Growth Trending?
Atreyu Capital Markets' P/E ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the market.
Retrospectively, the last year delivered an exceptional 22% gain to the company's bottom line. As a result, it also grew EPS by 24% in total over the last three years. Accordingly, shareholders would have probably been satisfied with the medium-term rates of earnings growth.
This is in contrast to the rest of the market, which is expected to grow by 23% over the next year, materially higher than the company's recent medium-term annualised growth rates.
With this information, we can see why Atreyu Capital Markets is trading at a P/E lower than the market. 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 Bottom Line On Atreyu Capital Markets' P/E
Despite Atreyu Capital Markets' shares building up a head of steam, its P/E still lags most other companies. 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.
As we suspected, our examination of Atreyu Capital Markets 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. If recent medium-term earnings trends continue, it's hard to see the share price rising strongly in the near future under these circumstances.
Before you settle on your opinion, we've discovered 1 warning sign for Atreyu Capital Markets that you should be aware of.
If you're unsure about the strength of Atreyu Capital Markets' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.
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