Why Investors Shouldn't Be Surprised By Kingsoft Corporation Limited's (HKG:3888) P/E

Simply Wall St.02-16

With a price-to-earnings (or "P/E") ratio of 22.7x Kingsoft Corporation Limited (HKG:3888) may be sending very bearish signals at the moment, given that almost half of all companies in Hong Kong have ...

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Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/E.    Trump has pledged to \"unleash\" American oil and gas and these 15 US stocks have developments that are poised to benefit.  With earnings growth that's superior to most other companies of late, Kingsoft has been doing relatively well.   The P/E is probably high because investors think this strong earnings performance will continue.  If not, then existing shareholders might be a little nervous about the viability of the share price.      View our latest analysis for Kingsoft SEHK:3888 Price to Earnings Ratio vs Industry February 16th 2026 If you'd like to see what analysts are forecasting going forward, you should check out our free report on Kingsoft. Advertisement How Is Kingsoft's Growth Trending?   Kingsoft's P/E ratio would be typical for a company that's expected to deliver very strong growth, and importantly, perform much better than the market.   Taking a look back first, we see that the company managed to grow earnings per share by a handy 12% last year.   However, due to its less than impressive performance prior to this period, EPS growth is practically non-existent over the last three years overall.  Accordingly, shareholders probably wouldn't have been overly satisfied with the unstable medium-term growth rates.     Looking ahead now, EPS is anticipated to climb by 19% per year during the coming three years according to the eleven analysts following the company.  With the market only predicted to deliver 14% per year, the company is positioned for a stronger earnings result.  With this information, we can see why Kingsoft is trading at such a high P/E compared to the market.  It seems most investors are expecting this strong future growth and are willing to pay more for the stock.    The Final Word  It's argued the price-to-earnings ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.  As we suspected, our examination of Kingsoft's analyst forecasts revealed that its superior earnings outlook is contributing to its high P/E.  At this stage investors feel the potential for a deterioration in earnings isn't great enough to justify a lower P/E ratio.  It's hard to see the share price falling strongly in the near future under these circumstances.      Many other vital risk factors can be found on the company's balance sheet.  Take a look at our free balance sheet analysis for Kingsoft with six simple checks on some of these key factors.   If these risks are making you reconsider your opinion on Kingsoft, explore our interactive list of high quality stocks to get an idea of what else is out there. Valuation is complex, but we're here to simplify it.Discover if Kingsoft might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.Access Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"tenantId":"TBGLOBAL","deviceId":"web-server-community-laohu8-v3","version":"4.36.2","shortVersion":"4.36.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2611174566","isCrawlerRequest":true}