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After Leaping 35% ERI Holdings Co., Ltd. (TSE:6083) Shares Are Not Flying Under The Radar

Simply Wall St · 1d ago

Despite an already strong run, ERI Holdings Co., Ltd. (TSE:6083) shares have been powering on, with a gain of 35% in the last thirty days. The annual gain comes to 133% following the latest surge, making investors sit up and take notice.

After such a large jump in price, ERI Holdings may be sending bearish signals at the moment with its price-to-earnings (or "P/E") ratio of 20.9x, since almost half of all companies in Japan have P/E ratios under 14x and even P/E's lower than 10x 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 as high as it is.

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Recent times have been quite advantageous for ERI Holdings as its earnings have been rising very briskly. 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 ERI Holdings

pe-multiple-vs-industry
TSE:6083 Price to Earnings Ratio vs Industry December 18th 2025
We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on ERI Holdings' earnings, revenue and cash flow.

How Is ERI Holdings' Growth Trending?

There's an inherent assumption that a company should outperform the market for P/E ratios like ERI Holdings' to be considered reasonable.

If we review the last year of earnings growth, the company posted a terrific increase of 71%. Pleasingly, EPS has also lifted 47% 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 8.9% shows it's noticeably more attractive on an annualised basis.

In light of this, it's understandable that ERI Holdings' P/E sits above the majority of other companies. It seems most investors are expecting this strong growth to continue and are willing to pay more for the stock.

What We Can Learn From ERI Holdings' P/E?

ERI Holdings shares have received a push in the right direction, but its P/E is elevated too. 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 ERI Holdings maintains its high P/E on the strength of its recent three-year growth being higher than the wider market forecast, 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. Unless the recent medium-term conditions change, they will continue to provide strong support to the share price.

There are also other vital risk factors to consider before investing and we've discovered 1 warning sign for ERI Holdings that you should be aware of.

It's important to make sure you look for a great company, not just the first idea you come across. So take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).