The Shanghai Mechanical & Electrical Industry Co.,Ltd. (SHSE:600835) share price has done very well over the last month, posting an excellent gain of 36%. Notwithstanding the latest gain, the annual share price return of 8.3% isn’t as impressive.
In spite of the firm bounce in price, given about half the companies in China have price-to-earnings ratios (or “P/E’s”) above 32x, you may still consider Shanghai Mechanical & Electrical IndustryLtd as a highly attractive investment with its 15.2x 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 so limited.
Shanghai Mechanical & Electrical IndustryLtd has been struggling lately as its earnings have declined faster than most other companies. It seems that many are expecting the dismal earnings performance to persist, which has repressed the P/E. If you still like the company, you’d want its earnings trajectory to…
