WEBULL

Tokai Carbon Korea Co., Ltd.'s (KOSDAQ:064760) Share Price Not Quite Adding Up

Simply Wall St · 6d ago

With a price-to-earnings (or "P/E") ratio of 25x Tokai Carbon Korea Co., Ltd. (KOSDAQ:064760) may be sending very bearish signals at the moment, given that almost half of all companies in Korea have P/E ratios under 13x and even P/E's lower than 7x are not unusual. 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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Recent times have been advantageous for Tokai Carbon Korea as its earnings have been rising faster than most other companies. 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.

View our latest analysis for Tokai Carbon Korea

pe-multiple-vs-industry
KOSDAQ:A064760 Price to Earnings Ratio vs Industry January 5th 2026
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Tokai Carbon Korea.

Does Growth Match The High P/E?

In order to justify its P/E ratio, Tokai Carbon Korea would need to produce outstanding growth well in excess of the market.

Retrospectively, the last year delivered a decent 10% gain to the company's bottom line. Still, lamentably EPS has fallen 23% in aggregate from three years ago, which is disappointing. So unfortunately, we have to acknowledge that the company has not done a great job of growing earnings over that time.

Looking ahead now, EPS is anticipated to climb by 21% during the coming year according to the five analysts following the company. Meanwhile, the rest of the market is forecast to expand by 36%, which is noticeably more attractive.

In light of this, it's alarming that Tokai Carbon Korea's P/E sits above the majority of other companies. Apparently many investors in the company are way more bullish than analysts indicate and aren't willing to let go of their stock at any price. There's a good chance these shareholders are setting themselves up for future disappointment if the P/E falls to levels more in line with the growth outlook.

What We Can Learn From Tokai Carbon Korea's 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.

Our examination of Tokai Carbon Korea's analyst forecasts revealed that its inferior earnings outlook isn't impacting its high P/E anywhere near as much as we would have predicted. When we see a weak earnings outlook with slower than market growth, 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.

The company's balance sheet is another key area for risk analysis. Our free balance sheet analysis for Tokai Carbon Korea with six simple checks will allow you to discover any risks that could be an issue.

Of course, you might also be able to find a better stock than Tokai Carbon Korea. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.