Fund Creation Group Co., Ltd. (TSE: 3266) shows investor popularity with 32% rise

of Fund Creation Group Co., Ltd. (TSE:3266) stock has performed very well over the last month, increasing by a hefty 32%. Looking at the broader picture, his 25% increase for the year is also quite reasonable, although not as strong as last month.

With prices soaring, Fund Creation Group’s price-to-earnings ratio of 22.8 times may look like a strong sell at this point compared to the Japanese market, where about half the companies own the stock. P/E ratios of less than 14x and even P/E ratios of less than 10x are very common. Nevertheless, we need to dig a little deeper to determine whether there is a rational basis for the P/E ratio being so elevated.

For example, consider that Fund Creation Group’s revenue has been declining and its recent financial results have been poor. Perhaps many expect the company to continue to outperform most other companies over the coming period, which may be keeping the P/E ratio from collapsing. If not, existing shareholders could become very nervous about the viability of the stock price.

Check out our latest analysis for Fund Creation Group.

We don’t have analyst forecasts, but checking our forecasts will tell you how recent trends are setting up the company’s future. free Fund Creation Group earnings, revenue and cash flow report.

What do growth metrics tell us about a high P/E ratio?

The only time it’s really reassuring to see a P/E as high as Fund Creation Group’s is when the company’s growth is clearly on track to outperform the market.

Looking back at last year’s earnings, we regret to note that the company’s profit fell by 19%. Still, despite the past 12 months, EPS has increased an impressive total of 631% compared to his three years ago. Although it has been a bumpy road, it is no exaggeration to say that recent revenue growth has been more than sufficient for the company.

The company’s momentum is stronger based on recent medium-term annualized earnings results when compared to the market, which is only expected to grow 11% over the next 12 months.

This information helps explain why Fund Creation Group is trading at a very high P/E ratio compared to the market. Most investors expect this strong growth to continue and appear willing to pay more for the stock.

The last word

Fund Creation Group stock has been gaining quite a bit of momentum lately, with its P/E ratio increasing significantly. Although we are usually careful not to read too much into price-to-earnings ratios when making investment decisions, price-to-earnings ratios can reveal a lot about what other market participants think about a company. there is.

As expected, we find that Fund Creation Group maintains a high P/E ratio, on the strength of its growth rate over the last three years, which has exceeded the overall market’s expectations. At the moment, shareholders are satisfied with the P/E ratio as they are confident that earnings are not threatened. Unless the recent medium-term situation changes, stock prices will continue to be strongly supported.

Additionally, you should also learn about these 3 warning signs we’ve spotted with Fund Creation Group (Including the important one).

If you are… There are concerns about the strength of Fund Creation Group’s business.Why not explore our interactive list of stocks with solid business fundamentals for other companies you may have missed?

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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 articles are not intended to be 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.