Market analysts regard most major companies traded on the Stock Exchange as "expensive" compared with similar companies of developed countries, but the growth potential is higher in Romania than in other Central European countries.
Against the PER indicators of other similar companies, analysts say banks seem to be the most expensive at present, with the "best" situation seen in the case of oil companies.
Pharmaceutical companies listed on the Bucharest Stock Exchange are valued, according to market analysts, at high levels, compared with similar companies on other markets, but in this situation, too, things are open to interpretation from case to case. "Comparability with similar foreign companies can be brought up only with regard to turnover growth rates and operating income margins. Under the circumstances, we can consider the Romanian drugs market to be in an expansion phase, with promising business growth prospects in the case of domestic firms (...)," says Cristian Alexa, an analyst with Broker Cluj.
Overrated optimism or justified hopes: this was one of the questions on the Stock Exchange several years ago, when the main stocks registered fast price growth without them being sustained by financial results and thus came to be valued much higher than the average of similar companies operating on more developed markets. Business growth potential was the explanation Stock Exchange analysts offered then for the price hikes of stocks, which went way beyond the income growth pace reported by companies. They offer the same explanation today.
For emerging markets like Romania, the value of PER is less relevant, especially when speaking about non-restructured companies, still held by the state.
Under the circumstances, stock prices do not reflect the actual situation of companies, but rather the investors' confidence in the future. Moreover, a "higher" value of PER can point to the clear expectations of investors with regard to the growth pace of a company or activity sector.
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