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After Leaping 26% Ashot Ashkelon Industries Ltd. (TLV:ASHO) Shares Are Not Flying Under The Radar

Simply Wall St · 07/04 04:09

The Ashot Ashkelon Industries Ltd. (TLV:ASHO) share price has done very well over the last month, posting an excellent gain of 26%. The last 30 days bring the annual gain to a very sharp 96%.

Following the firm bounce in price, Ashot Ashkelon Industries' price-to-earnings (or "P/E") ratio of 52.9x might make it look like a strong sell right now compared to the market in Israel, where around half of the companies have P/E ratios below 16x and even P/E's below 10x are quite common. However, the P/E might be quite high for a reason and it requires further investigation to determine if it's justified.

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Ashot Ashkelon Industries certainly has been doing a great job lately as it's been growing earnings at a really rapid pace. The P/E is probably high because investors think this strong earnings growth will be enough to outperform the broader market in the near future. If not, then existing shareholders might be a little nervous about the viability of the share price.

View our latest analysis for Ashot Ashkelon Industries

pe-multiple-vs-industry
TASE:ASHO Price to Earnings Ratio vs Industry July 4th 2025
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Ashot Ashkelon Industries will help you shine a light on its historical performance.

Is There Enough Growth For Ashot Ashkelon Industries?

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

Taking a look back first, we see that the company grew earnings per share by an impressive 44% last year. Pleasingly, EPS has also lifted 282% in aggregate from three years ago, thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing earnings over that time.

Weighing that recent medium-term earnings trajectory against the broader market's one-year forecast for expansion of 9.1% shows it's noticeably more attractive on an annualised basis.

With this information, we can see why Ashot Ashkelon Industries is trading at such a high P/E compared to the market. Presumably shareholders aren't keen to offload something they believe will continue to outmanoeuvre the bourse.

The Bottom Line On Ashot Ashkelon Industries' P/E

Shares in Ashot Ashkelon Industries have built up some good momentum lately, which has really inflated its P/E. Generally, our preference is to limit the use of the price-to-earnings ratio to establishing what the market thinks about the overall health of a company.

As we suspected, our examination of Ashot Ashkelon Industries revealed its three-year earnings trends are contributing to its high P/E, given they look better than current market expectations. Right now shareholders are comfortable with the P/E as they are quite confident earnings aren't under threat. Unless the recent medium-term conditions change, they will continue to provide strong support to the share price.

Plus, you should also learn about this 1 warning sign we've spotted with Ashot Ashkelon Industries.

If P/E ratios interest you, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.