To the annoyance of some shareholders, Shanghai Titan Scientific Co., Ltd. (SHSE:688133) shares are down a considerable 27% in the last month, which continues a horrid run for the company. For any long-term shareholders, the last month ends a year to forget by locking in a 72% share price decline.
Even after such a large drop in price, given around half the companies in China have price-to-earnings ratios (or “P/E’s”) below 29x, you may still consider Shanghai Titan Scientific as a stock to potentially avoid with its 40.5x P/E ratio. Although, it’s not wise to just take the P/E at face value as there may be an explanation why it’s as high as it is.
While the market has experienced earnings growth lately, Shanghai Titan Scientific’s earnings have gone into reverse gear, which is not great. One possibility is that the P/E is high because investors think this poor earnings performance will turn the corner. If not, then…
