Taliworks Corporation Berhad's (KLSE:TALIWRK) Popularity With Investors Is Clear

When close to half the companies in Malaysia have price-to-earnings ratios (or "P/E's") below 12x, you may consider Taliworks Corporation Berhad (KLSE:TALIWRK) as a stock to avoid entirely with its 38.3x P/E ratio. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's so lofty.

Taliworks Corporation Berhad could be doing better as its earnings have been going backwards lately while most other companies have been seeing positive earnings growth. One possibility is that the P/E is high because investors think this poor earnings performance will turn the corner. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

Check out our latest analysis for Taliworks Corporation Berhad

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Want the full picture on analyst estimates for the company? Then our free report on Taliworks Corporation Berhad will help you uncover what's on the horizon.

How Is Taliworks Corporation Berhad's Growth Trending?

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

Taking a look back first, the company's earnings per share growth last year wasn't something to get excited about as it posted a disappointing decline of 44%. As a result, earnings from three years ago have also fallen 69% overall. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.

Turning to the outlook, the next year should generate growth of 59% as estimated by the four analysts watching the company. Meanwhile, the rest of the market is forecast to only expand by 8.0%, which is noticeably less attractive.

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

The Bottom Line On Taliworks Corporation Berhad's P/E

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 Taliworks Corporation Berhad's analyst forecasts revealed that its superior earnings outlook is contributing to its high P/E. Right now shareholders are comfortable with the P/E as they are quite confident future earnings aren't under threat. It's hard to see the share price falling strongly in the near future under these circumstances.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Taliworks Corporation Berhad (1 is a bit concerning!) that you need to be mindful of.

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

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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.

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