Japan Petroleum Exploration Co., Ltd.’s (TSE:1662) Share Price Boosted 36% But Its Business Prospects Need A Lift Too

Japan Petroleum Exploration Co., Ltd. (TSE:1662) shares have continued their recent momentum with a 36% gain in the last month alone. The last 30 days bring the annual gain to a very sharp 65%.

Although its price has surged higher, Japan Petroleum Exploration’s price-to-earnings (or “P/E”) ratio of 5.6x might still make it look like a strong buy right now compared to the market in Japan, where around half of the companies have P/E ratios above 15x and even P/E’s above 23x are quite common. Nonetheless, we’d need to dig a little deeper to determine if there is a rational basis for the highly reduced P/E.

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part – they are all under $10bn in marketcap – there is still time to get in early.

With earnings growth that’s superior to most other companies of late, Japan Petroleum Exploration 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.

View our latest analysis for Japan Petroleum Exploration

TSE:1662 Price to Earnings Ratio vs Industry January 13th 2026 Want the full picture on analyst estimates for the company? Then our free report on Japan Petroleum Exploration will help you uncover what’s on the horizon. What Are Growth Metrics Telling Us About The Low P/E?

There’s an inherent assumption that a company should far underperform the market for P/E ratios like Japan Petroleum Exploration’s to be considered reasonable.

Retrospectively, the last year delivered an exceptional 91% gain to the company’s bottom line. However, this wasn’t enough as the latest three year period has seen a very unpleasant 21% drop in EPS in aggregate. Therefore, it’s fair to say the earnings growth recently has been undesirable for the company.

Turning to the outlook, the next three years should bring diminished returns, with earnings decreasing 32% per year as estimated by the five analysts watching the company. Meanwhile, the broader market is forecast to expand by 9.0% each year, which paints a poor picture.

In light of this, it’s understandable that Japan Petroleum Exploration’s P/E would sit below the majority of other companies. However, shrinking earnings are unlikely to lead to a stable P/E over the longer term. There’s potential for the P/E to fall to even lower levels if the company doesn’t improve its profitability.

The Final Word

Even after such a strong price move, Japan Petroleum Exploration’s P/E still trails the rest of the market significantly. Using the price-to-earnings ratio alone to determine if you should sell your stock isn’t sensible, however it can be a practical guide to the company’s future prospects.

We’ve established that Japan Petroleum Exploration maintains its low P/E on the weakness of its forecast for sliding earnings, as expected. Right now shareholders are accepting the low P/E as they concede future earnings probably won’t provide any pleasant surprises. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

There are also other vital risk factors to consider and we’ve discovered 4 warning signs for Japan Petroleum Exploration (1 is concerning!) that you should be aware of before investing here.

If you’re unsure about the strength of Japan Petroleum Exploration’s business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.