Shanghai Conant Optical Co., Ltd. (HKG:2276) shareholders would be excited to see that the share price has had a great month, posting a 31% gain and recovering from prior weakness. The annual gain comes to 207% following the latest surge, making investors sit up and take notice.
After such a large jump in price, Shanghai Conant Optical’s price-to-earnings (or “P/E”) ratio of 32x might make it look like a strong sell right now compared to the market in Hong Kong, where around half of the companies have P/E ratios below 10x and even P/E’s below 6x are quite common. However, the P/E might be quite high for a reason and it requires further investigation to determine if it’s justified.
Recent times have been advantageous for Shanghai Conant Optical as its earnings have been rising faster than most other…
