Shenzhen Bestec Technology Co., Ltd. (SZSE:300822) Shares Plummet 29%, Risks Remain High at This Price

of Shenzhen Besttech Technology Co., Ltd. (SZSE:300822) shares have fallen 29% over the past 30 days, shedding much of the recent share price gains. In fact, the recent decline has reduced the annualized gain over the past 12 months to a relatively modest 2.9%.

Despite the massive share price decline, Shenzhen BIQI Technology, with a price-to-earnings (or “P/E”) ratio of 65.1, could be considered a stock to avoid altogether, given that roughly half of Chinese companies have a price-to-earnings (or “P/E”) ratio below 28. That said, we need to dig a little deeper to determine whether there is a rational basis for the sky-high P/E.

Shenzhen Besttech Technology is in a pretty good position recently, as its earnings have been growing rapidly. It seems that many are expecting the company’s strong earnings performance to outperform most other companies in the coming period, which is increasing investor willingness to pay a premium for the company’s shares. We really hope so, otherwise we’d be paying a pretty high price for no good reason.

See our latest analysis for Shenzhen Besttech Technology

While there are no analyst forecasts, checking the company’s recent developments can give you an idea of ​​what the future holds for the company. free Shenzhen Bestec Technology earnings, revenue and cash flow report.

What is the growth trend of Shenzhen Department Store?

There is essentially an assumption that for a P/E ratio like Shenzhen Bestec Technology to be considered reasonable, the company must perform significantly better than the market.

Looking back at earnings growth over the last year, the company recorded an impressive 33% growth. However, what’s unbelievable is that EPS has fallen a total of 70% compared to three years ago, which is very disappointing. This has likely made shareholders pessimistic about earnings growth in the medium term.

The company’s downward trend based on recent mid-term earnings results looks grim when compared to a market that is expected to grow 36% over the next 12 months.

With this information, we can see that it is concerning that Shenzhen Besttech Technology’s P/E ratio is higher than the market. It appears that most investors are ignoring the recent poor growth rate and hoping for an improvement in the company’s business prospects. Only the boldest would consider these prices sustainable, as a continuation of the recent earnings trend will likely eventually weigh on the share price.

Key Takeaways

The sharp decline in the share price has done little to dent Shenzhen Bestec Technology’s extremely high price-to-earnings ratio. While it would be unwise to use the price-to-earnings ratio alone to decide whether to sell a stock, it can be a practical indicator of the company’s future prospects.

Our research on Shenzhen Binance Technology reveals that a contraction in the company’s earnings over the medium term, with the market expected to grow, will have less of an impact on the company’s high price-to-earnings multiple than expected. At this point, we are increasingly uneasy about the high price-to-earnings multiple, as it is highly unlikely that this earnings performance will support such positive sentiment for the long term. If the recent medium-term earnings trend continues, shareholders’ investments will be exposed to significant risks and potential investors will be at risk of paying an excessive premium.

You should always be aware of the risks. For example: Shenzhen Bestech Technology has 2 warning signs I think you should know.

of course, By considering a few good candidates, you may find a great investment. Take a look at this free A list of companies trading at low P/Es and with strong growth track records.

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This article by Simply Wall St is general in nature. We use only unbiased methodologies to provide commentary based on historical data and analyst forecasts, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives, or your financial situation. We seek to provide long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

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