The Shanghai Kelai Mechatronics Engineering Co.,Ltd. (SHSE:603960) share price has softened a substantial 28% over the previous 30 days, handing back much of the gains the stock has made lately. Still, a bad month hasn’t completely ruined the past year with the stock gaining 38%, which is great even in a bull market.
In spite of the heavy fall in price, given close to half the companies in China have price-to-earnings ratios (or “P/E’s”) below 29x, you may still consider Shanghai Kelai Mechatronics EngineeringLtd as a stock to avoid entirely with its 79.6x P/E ratio. However, the P/E might be quite high for a reason and it requires further investigation to determine if it’s justified.
With earnings growth that’s superior to most other companies of late, Shanghai Kelai Mechatronics EngineeringLtd has been doing relatively well. The P/E is probably high because investors think this strong earnings performance will…
