Despite an already strong run, PFB Corporation (TSE:PFB) shares have been powering on, with a gain of 32% in the last thirty days. The last 30 days bring the annual gain to a very sharp 55%.
In spite of the firm bounce in price, PFB’s price-to-earnings (or “P/E”) ratio of 9.7x might still make it look like a buy right now compared to the market in Canada, where around half of the companies have P/E ratios above 17x and even P/E’s above 40x are quite common. Nonetheless, we’d need to dig a little deeper to determine if there is a rational basis for the reduced P/E.
Recent times have been advantageous for PFB as its earnings have been rising faster than most other companies. One possibility is that the P/E is low because investors think this strong earnings performance might be less impressive moving forward. If not, then existing shareholders