WEBULL

Cobram Estate Olives Limited (ASX:CBO) Stock Rockets 27% As Investors Are Less Pessimistic Than Expected

Simply Wall St · 2d ago

Cobram Estate Olives Limited (ASX:CBO) shares have had a really impressive month, gaining 27% after a shaky period beforehand. The last 30 days bring the annual gain to a very sharp 84%.

Since its price has surged higher, Cobram Estate Olives may be sending very bearish signals at the moment with a price-to-earnings (or "P/E") ratio of 38x, since almost half of all companies in Australia have P/E ratios under 21x and even P/E's lower than 12x are not unusual. 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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With earnings growth that's superior to most other companies of late, Cobram Estate Olives has been doing relatively well. 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 Cobram Estate Olives

pe-multiple-vs-industry
ASX:CBO Price to Earnings Ratio vs Industry December 29th 2025
Keen to find out how analysts think Cobram Estate Olives' future stacks up against the industry? In that case, our free report is a great place to start.

Does Growth Match The High P/E?

The only time you'd be truly comfortable seeing a P/E as steep as Cobram Estate Olives' 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 terrific increase of 167%. Although, its longer-term performance hasn't been as strong with three-year EPS growth being relatively non-existent overall. Accordingly, shareholders probably wouldn't have been overly satisfied with the unstable medium-term growth rates.

Shifting to the future, estimates from the two analysts covering the company suggest earnings growth is heading into negative territory, declining 5.7% per annum over the next three years. That's not great when the rest of the market is expected to grow by 17% per year.

In light of this, it's alarming that Cobram Estate Olives' P/E sits above the majority of other companies. Apparently many investors in the company reject the analyst cohort's pessimism and aren't willing to let go of their stock at any price. There's a very good chance these shareholders are setting themselves up for future disappointment if the P/E falls to levels more in line with the negative growth outlook.

What We Can Learn From Cobram Estate Olives' P/E?

Cobram Estate Olives' P/E is flying high just like its stock has during the last month. 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.

We've established that Cobram Estate Olives currently trades on a much higher than expected P/E for a company whose earnings are forecast to decline. When we see a poor outlook with earnings heading backwards, we suspect the share price is at risk of declining, sending the high P/E lower. Unless these conditions improve markedly, it's very challenging to accept these prices as being reasonable.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Cobram Estate Olives that you need to be mindful of.

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