With a price-to-earnings (or “P/E”) ratio of 10.1x Japan Airlines Co., Ltd. (TSE:9201) may be sending bullish signals at the moment, given that almost half of all companies in Japan have P/E ratios greater than 15x and even P/E’s higher than 23x are not unusual. Nonetheless, we’d need to dig a little deeper to determine if there is a rational basis for the reduced P/E.
With earnings growth that’s superior to most other companies of late, Japan Airlines has been doing relatively well. One possibility is that the P/E is low because investors think this strong earnings performance might be less impressive moving forward. If you like the company, you’d be hoping this isn’t the case so that you could potentially pick up some stock while it’s out of favour.
See our latest analysis for Japan Airlines
TSE:9201 Price to Earnings Ratio vs Industry January 27th 2026 If you’d like to see what analysts are forecasting going forward, you should check out our free report on Japan Airlines. Does Growth Match The Low P/E?
Japan Airlines’ P/E ratio would be typical for a company that’s only expected to deliver limited growth, and importantly, perform worse than the market.
Taking a look back first, we see that the company grew earnings per share by an impressive 49% last year. Although, its longer-term performance hasn’t been as strong with three-year EPS growth being relatively non-existent overall. Therefore, it’s fair to say that earnings growth has been inconsistent recently for the company.
Shifting to the future, estimates from the eleven analysts covering the company suggest earnings should grow by 3.9% per annum over the next three years. Meanwhile, the rest of the market is forecast to expand by 8.9% each year, which is noticeably more attractive.
In light of this, it’s understandable that Japan Airlines’ P/E sits below the majority of other companies. Apparently many shareholders weren’t comfortable holding on while the company is potentially eyeing a less prosperous future.
What We Can Learn From Japan Airlines’ 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 Japan Airlines’ analyst forecasts revealed that its inferior earnings outlook is contributing to its low P/E. At this stage investors feel the potential for an improvement in earnings isn’t great enough to justify a higher P/E ratio. It’s hard to see the share price rising strongly in the near future under these circumstances.
You always need to take note of risks, for example – Japan Airlines has 1 warning sign we think you should be aware of.
Of course, you might also be able to find a better stock than Japan Airlines. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.
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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.