Pop Mart International Group (SEHK:9992) stock has seen some movement recently, catching the attention of investors looking to understand what is driving shares of the company higher over the past day, even though performance this month has been mixed.
See our latest analysis for Pop Mart International Group.
It has been a whirlwind year for Pop Mart International Group, with last session’s 2.40% share price gain standing out after some recent volatility. Momentum remains firmly upward in the bigger picture, as the stock has delivered an eye-catching 242.36% total shareholder return over the past year, offering strong validation for investors who stuck with it through the ups and downs.
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With such impressive gains behind it, the big question now is whether Pop Mart International Group’s shares remain undervalued or if the current price fully reflects the company’s future potential, leaving little room for upside.
Pop Mart International Group’s current share price reflects a Price-to-Earnings (P/E) ratio of 46.1x. This is considered high compared to both its direct peers and the broader Specialty Retail sector. At a last close of HK$256.4, this premium valuation suggests investors are pricing in significant future earnings growth for the company.
The Price-to-Earnings ratio measures how much investors are willing to pay today for each dollar of earnings the company generates. For growth-focused companies in rapidly expanding sectors, higher multiples can sometimes be justified by the promise of future profitability. In Pop Mart’s case, the strong recent earnings surge is likely contributing to elevated market expectations and, as a result, a higher P/E multiple.
However, Pop Mart’s P/E of 46.1x is not only above the Specialty Retail industry average of 13.3x, but also far exceeds the peer group average of 19x. When compared to the estimated fair P/E ratio of 31.1x (based on regression models factoring in growth and market characteristics), the stock currently trades at a substantial premium. If the market reverts toward the fair multiple, there could be notable price movement ahead.
Explore the SWS fair ratio for Pop Mart International Group
Result: Price-to-Earnings of 46.1x (OVERVALUED)
However, slower revenue or earnings growth could quickly dampen sentiment, especially if market expectations remain as elevated as they are now.