There's Reason For Concern Over JINS HOLDINGS Inc.'s (TSE:3046) Massive 30% Price Jump

Simply Wall St · 3d ago

JINS HOLDINGS Inc. (TSE:3046) shareholders have had their patience rewarded with a 30% share price jump in the last month. The annual gain comes to 153% following the latest surge, making investors sit up and take notice.

Since its price has surged higher, JINS HOLDINGS may be sending very bearish signals at the moment with a price-to-earnings (or "P/E") ratio of 29.8x, since almost half of all companies in Japan have P/E ratios under 12x and even P/E's lower than 8x are not unusual. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's so lofty.

Our free stock report includes 1 warning sign investors should be aware of before investing in JINS HOLDINGS. Read for free now.

With earnings growth that's superior to most other companies of late, JINS HOLDINGS has been doing relatively well. The P/E is probably high because investors think this strong earnings performance will continue. If not, then existing shareholders might be a little nervous about the viability of the share price.

View our latest analysis for JINS HOLDINGS

pe-multiple-vs-industry
TSE:3046 Price to Earnings Ratio vs Industry April 14th 2025
Want the full picture on analyst estimates for the company? Then our free report on JINS HOLDINGS will help you uncover what's on the horizon.

Does Growth Match The High P/E?

The only time you'd be truly comfortable seeing a P/E as steep as JINS HOLDINGS' is when the company's growth is on track to outshine the market decidedly.

If we review the last year of earnings growth, the company posted a terrific increase of 172%. Pleasingly, EPS has also lifted 171% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have probably welcomed those medium-term rates of earnings growth.

Looking ahead now, EPS is anticipated to climb by 10% per year during the coming three years according to the six analysts following the company. Meanwhile, the rest of the market is forecast to expand by 9.7% per year, which is not materially different.

With this information, we find it interesting that JINS HOLDINGS is trading at a high P/E compared to the market. It seems most investors are ignoring the fairly average growth expectations and are willing to pay up for exposure to the stock. Although, additional gains will be difficult to achieve as this level of earnings growth is likely to weigh down the share price eventually.

The Bottom Line On JINS HOLDINGS' P/E

The strong share price surge has got JINS HOLDINGS' P/E rushing to great heights as well. We'd say the price-to-earnings ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

We've established that JINS HOLDINGS currently trades on a higher than expected P/E since its forecast growth is only in line with the wider market. When we see an average earnings outlook with market-like growth, we suspect the share price is at risk of declining, sending the high P/E lower. Unless these conditions improve, it's challenging to accept these prices as being reasonable.

Plus, you should also learn about this 1 warning sign we've spotted with JINS HOLDINGS.

Of course, you might find a fantastic investment by looking at a few good candidates. So take a peek at this free list of companies with a strong growth track record, trading on a low P/E.