Cordlife Group Limited (SGX:P8A) shares have had a horrible month, losing 28% after a relatively good period beforehand. The last month has meant the stock is now only up 8.3% during the last year.

Even after such a large drop in price, Cordlife Group may still be sending bearish signals at the moment with its price-to-earnings (or "P/E") ratio of 16x, since almost half of all companies in Singapore have P/E ratios under 12x and even P/E's lower than 7x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the elevated P/E.

As an illustration, earnings have deteriorated at Cordlife Group over the last year, which is not ideal at all. It might be that many expect the company to still outplay most other companies over the coming period, which has kept the P/E from collapsing. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

View our latest analysis for Cordlife Group

We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Cordlife Group's earnings, revenue and cash flow.

What Are Growth Metrics Telling Us About The High P/E?

In order to justify its P/E ratio, Cordlife Group would need to produce impressive growth in excess of the market.

Retrospectively, the last year delivered a frustrating 6.0% decrease to the company's bottom line. The last three years don't look nice either as the company has shrunk EPS by 30% in aggregate. So unfortunately, we have to acknowledge that the company has not done a great job of growing earnings over that time.

Weighing that medium-term earnings trajectory against the broader market's one-year forecast for expansion of 9.2% shows it's an unpleasant look.

With this information, we find it concerning that Cordlife Group is trading at a P/E higher than the market. Apparently many investors in the company are way more bullish than recent times would indicate and aren't willing to let go of their stock at any price. Only the boldest would assume these prices are sustainable as a continuation of recent earnings trends is likely to weigh heavily on the share price eventually.

The Final Word

Despite the recent share price weakness, Cordlife Group's P/E remains higher than most other companies. Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.