Zhejiang Huace Film & TV Co., Ltd. (SZSE:300133) Shares fell 25%, but getting in cheap could be tough anyway

The Zhejiang Huace Film & TV Co., Ltd. (SZSE:300133) The share price is down a significant 25% in the last 30 days, giving back much of the gains the stock has made recently. The decline over the past thirty days has capped off a tough year for shareholders, with the share price down 24% in that time.

Although the price has dropped substantially, there still aren’t many who think Zhejiang Huace Film & TV’s price-to-earnings ratio (or ‘P/E’) of 30.1x is worth mentioning as the average price-to-earnings in China is worth mentioning. is comparable to about 29x. While this may not raise any eyebrows, if the price-to-earnings ratio is not justified, investors may miss out on a potential opportunity or ignore an impending disappointment.

Zhejiang Huace Film & TV has certainly done a good job lately, as profits have grown more than most other companies. It may be that many expect the strong earnings figures to decline, which is why the price/earnings has not increased. If not, existing shareholders have reason to be optimistic about the future direction of the share price.

Check out our latest analysis for Zhejiang Huace Film & TV

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SZSE:300133 Price-to-earnings ratio versus sector April 21, 2024

Want to get the full picture of analyst estimates for the company? Then our free report on Zhejiang Huace Film & TV will help you discover what’s on the horizon.

How is the growth trend of Zhejiang Huace Film & TV?

There is an inherent assumption that a company must match the market for price-to-earnings ratios such as Zhejiang Huace Film & TV to be considered reasonable.

Looking back first, we see that the company managed to grow earnings per share by a handy 14% last year. Yet earnings per share have barely increased in total compared to three years ago, which is not ideal. Therefore, it’s fair to say that earnings growth has been inconsistent for the company lately.

Looking to the future, estimates from the seven analysts covering the company suggest earnings should grow 34% over the next year. That appears to be similar to the 35% growth forecast for the broader market.

With this information, we can see why Zhejiang Huace Film & TV is trading at a fairly similar price/earnings as the market. Apparently shareholders are comfortable just holding on while the company stays in the background.

What can we learn from Zhejiang Huace Film & TV’s price-to-earnings ratio?

With the stock price having fallen into a hole, the price-to-earnings ratio for Zhejiang Huace Film & TV now looks pretty average. In our view, the price-to-earnings ratio is not primarily a valuation tool, but rather intended to gauge current investor sentiment and future expectations.

As we suspected, our examination of Zhejiang Huace Film & TV’s analyst forecasts found that its market-beating earnings outlook is contributing to its current price-to-earnings ratio. At this point, shareholders are comfortable with the price-to-earnings ratio as they are confident that future earnings will not bring any surprises. It’s hard to see the stock price moving significantly in either direction in the near future under these conditions.

Remember that there may be other risks. For example, we identified ourselves Two warning signs for Zhejiang Huace Film & TV (1 concerns) that you should be aware of.

If price-earnings ratios interest youyou might want to see this free collection of other companies with strong earnings growth and low price/earnings ratios.

Valuation is complex, but we help make it simple.

Invent or Zhejiang Huace Film & TV may be over or undervalued if you look at our comprehensive analysis, including fair value estimates, risks and cautions, dividends, insider transactions and financial health.

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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It 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 you with targeted, long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no positions in the stocks mentioned.