Nasdaq
华尔街日报Optimistic Investors Push Creepy Jar S.A. (WSE:CRJ) Shares Up 47% But Growth Is Lacking
Creepy Jar S.A. (WSE:CRJ) shareholders would be excited to see that the share price has had a great month, posting a 47% gain and recovering from prior weakness. The last month tops off a massive increase of 122% in the last year.
Since its price has surged higher, Creepy Jar's price-to-earnings (or "P/E") ratio of 23.6x might make it look like a strong sell right now compared to the market in Poland, where around half of the companies have P/E ratios below 12x and even P/E's below 8x are quite common. 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.
With earnings growth that's superior to most other companies of late, Creepy Jar has been doing relatively well. It seems that many are expecting the strong earnings performance to persist, which has raised the P/E. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.
Check out our latest analysis for Creepy Jar
How Is Creepy Jar's Growth Trending?
In order to justify its P/E ratio, Creepy Jar would need to produce outstanding growth well in excess of the market.
Retrospectively, the last year delivered an exceptional 93% gain to the company's bottom line. However, this wasn't enough as the latest three year period has seen a very unpleasant 55% drop in EPS in aggregate. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.
Turning to the outlook, the next three years should bring diminished returns, with earnings decreasing 0.3% per annum as estimated by the four analysts watching the company. With the market predicted to deliver 14% growth each year, that's a disappointing outcome.
In light of this, it's alarming that Creepy Jar's P/E sits above the majority of other companies. Apparently many investors in the company reject the analyst cohort's pessimism and aren't willing to let go of their stock at any price. There's a very good chance these shareholders are setting themselves up for future disappointment if the P/E falls to levels more in line with the negative growth outlook.
The Bottom Line On Creepy Jar's P/E
Creepy Jar's P/E is flying high just like its stock has during the last month. 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.
Our examination of Creepy Jar's analyst forecasts revealed that its outlook for shrinking earnings isn't impacting its high P/E anywhere near as much as we would have predicted. When we see a poor outlook with earnings heading backwards, we suspect the share price is at risk of declining, sending the high P/E lower. Unless these conditions improve markedly, it's very challenging to accept these prices as being reasonable.
Plus, you should also learn about these 2 warning signs we've spotted with Creepy Jar.
If these risks are making you reconsider your opinion on Creepy Jar, explore our interactive list of high quality stocks to get an idea of what else is out there.
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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.