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Lasertec Corporation's (TSE:6920) Shares Climb 30% But Its Business Is Yet to Catch Up

Simply Wall St · 06/24 21:22

Lasertec Corporation (TSE:6920) shareholders have had their patience rewarded with a 30% share price jump in the last month. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 48% in the last twelve months.

Following the firm bounce in price, given close to half the companies in Japan have price-to-earnings ratios (or "P/E's") below 13x, you may consider Lasertec as a stock to avoid entirely with its 23.6x P/E ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/E.

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Recent times haven't been advantageous for Lasertec as its earnings have been rising slower than most other companies. One possibility is that the P/E is high because investors think this lacklustre earnings performance will improve markedly. If not, then existing shareholders may be very nervous about the viability of the share price.

See our latest analysis for Lasertec

pe-multiple-vs-industry
TSE:6920 Price to Earnings Ratio vs Industry June 24th 2025
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Lasertec.

How Is Lasertec's Growth Trending?

The only time you'd be truly comfortable seeing a P/E as steep as Lasertec's 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 worthy increase of 4.9%. The latest three year period has also seen an excellent 274% overall rise in EPS, aided somewhat by its short-term performance. Accordingly, shareholders would have probably welcomed those medium-term rates of earnings growth.

Looking ahead now, EPS is anticipated to climb by 9.5% per annum during the coming three years according to the analysts following the company. Meanwhile, the rest of the market is forecast to expand by 8.6% per year, which is not materially different.

With this information, we find it interesting that Lasertec is trading at a high P/E compared to the market. Apparently many investors in the company are more bullish than analysts indicate and aren't willing to let go of their stock right now. These shareholders may be setting themselves up for disappointment if the P/E falls to levels more in line with the growth outlook.

What We Can Learn From Lasertec's P/E?

Lasertec's P/E is flying high just like its stock has during the last month. Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

Our examination of Lasertec's analyst forecasts revealed that its market-matching earnings outlook isn't impacting its high P/E as much as we would have predicted. Right now we are uncomfortable with the relatively high share price as the predicted future earnings aren't likely to support such positive sentiment for long. This places shareholders' investments at risk and potential investors in danger of paying an unnecessary premium.

Having said that, be aware Lasertec is showing 1 warning sign in our investment analysis, you should know about.

If you're unsure about the strength of Lasertec's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.