Market Participants Recognise Frontken Corporation Berhad's (KLSE:FRONTKN) Earnings Pushing Shares 33% Higher

Simply Wall St · 5d ago

Frontken Corporation Berhad (KLSE:FRONTKN) shareholders are no doubt pleased to see that the share price has bounced 33% in the last month, although it is still struggling to make up recently lost ground. But the gains over the last month weren't enough to make shareholders whole, as the share price is still down 8.2% in the last twelve months.

Since its price has surged higher, Frontken Corporation Berhad may be sending very bearish signals at the moment with a price-to-earnings (or "P/E") ratio of 43.6x, since almost half of all companies in Malaysia have P/E ratios under 13x 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.

We've discovered 1 warning sign about Frontken Corporation Berhad. View them for free.

Recent times have been advantageous for Frontken Corporation Berhad as its earnings have been rising faster than most other companies. The P/E is probably high because investors think this strong earnings performance will continue. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

See our latest analysis for Frontken Corporation Berhad

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KLSE:FRONTKN Price to Earnings Ratio vs Industry May 8th 2025
Want the full picture on analyst estimates for the company? Then our free report on Frontken Corporation Berhad will help you uncover what's on the horizon.

Is There Enough Growth For Frontken Corporation Berhad?

Frontken Corporation Berhad's P/E ratio would be typical for a company that's expected to deliver very strong growth, and importantly, perform much better than the market.

Taking a look back first, we see that the company grew earnings per share by an impressive 16% last year. The latest three year period has also seen a 26% overall rise in EPS, aided extensively by its short-term performance. Therefore, it's fair to say the earnings growth recently has been respectable for the company.

Turning to the outlook, the next three years should generate growth of 15% per annum as estimated by the nine analysts watching the company. Meanwhile, the rest of the market is forecast to only expand by 9.9% per annum, which is noticeably less attractive.

In light of this, it's understandable that Frontken Corporation Berhad's P/E sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Key Takeaway

Shares in Frontken Corporation Berhad have built up some good momentum lately, which has really inflated its P/E. Using the price-to-earnings ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

We've established that Frontken Corporation Berhad maintains its high P/E on the strength of its forecast growth being higher than the wider market, as expected. At this stage investors feel the potential for a deterioration in earnings isn't great enough to justify a lower P/E ratio. It's hard to see the share price falling strongly in the near future under these circumstances.

Plus, you should also learn about this 1 warning sign we've spotted with Frontken Corporation Berhad.

Of course, you might also be able to find a better stock than Frontken Corporation Berhad. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.