Lacklustre Performance Is Driving Aspire & Innovative Advertising Limited's (NSE:ASPIRE) 26% Price Drop

Simply Wall St · 07/02 00:07

Aspire & Innovative Advertising Limited (NSE:ASPIRE) shares have retraced a considerable 26% in the last month, reversing a fair amount of their solid recent performance. For any long-term shareholders, the last month ends a year to forget by locking in a 75% share price decline.

Since its price has dipped substantially, given about half the companies in India have price-to-earnings ratios (or "P/E's") above 30x, you may consider Aspire & Innovative Advertising as a highly attractive investment with its 11.1x P/E ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly reduced P/E.

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For example, consider that Aspire & Innovative Advertising's financial performance has been poor lately as its earnings have been in decline. It might be that many expect the disappointing earnings performance to continue or accelerate, which has repressed the P/E. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

Check out our latest analysis for Aspire & Innovative Advertising

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NSEI:ASPIRE Price to Earnings Ratio vs Industry July 2nd 2025
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Aspire & Innovative Advertising will help you shine a light on its historical performance.

How Is Aspire & Innovative Advertising's Growth Trending?

The only time you'd be truly comfortable seeing a P/E as depressed as Aspire & Innovative Advertising's is when the company's growth is on track to lag the market decidedly.

Taking a look back first, the company's earnings per share growth last year wasn't something to get excited about as it posted a disappointing decline of 69%. This means it has also seen a slide in earnings over the longer-term as EPS is down 35% in total over the last three years. So unfortunately, we have to acknowledge that the company has not done a great job of growing earnings over that time.

Weighing that medium-term earnings trajectory against the broader market's one-year forecast for expansion of 23% shows it's an unpleasant look.

With this information, we are not surprised that Aspire & Innovative Advertising is trading at a P/E lower than the market. Nonetheless, there's no guarantee the P/E has reached a floor yet with earnings going in reverse. There's potential for the P/E to fall to even lower levels if the company doesn't improve its profitability.

The Final Word

Having almost fallen off a cliff, Aspire & Innovative Advertising's share price has pulled its P/E way down as well. While the price-to-earnings ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of earnings expectations.

We've established that Aspire & Innovative Advertising maintains its low P/E on the weakness of its sliding earnings over the medium-term, as expected. Right now shareholders are accepting the low P/E as they concede future earnings probably won't provide any pleasant surprises. Unless the recent medium-term conditions improve, they will continue to form a barrier for the share price around these levels.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Aspire & Innovative Advertising (1 is concerning!) that you need to be mindful of.

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