Tianjin Jinran Public Utilities Company Limited (HKG:1265) shareholders have had their patience rewarded with a 27% share price jump in the last month. While recent buyers may be laughing, long-term holders might not be as pleased since the recent gain only brings the stock back to where it started a year ago.

In spite of the firm bounce in price, it's still not a stretch to say that Tianjin Jinran Public Utilities' price-to-sales (or "P/S") ratio of 0.3x right now seems quite "middle-of-the-road" compared to the Gas Utilities industry in Hong Kong, where the median P/S ratio is around 0.4x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

View our latest analysis for Tianjin Jinran Public Utilities

How Tianjin Jinran Public Utilities Has Been Performing

Revenue has risen at a steady rate over the last year for Tianjin Jinran Public Utilities, which is generally not a bad outcome. Perhaps the expectation moving forward is that the revenue growth will track in line with the wider industry for the near term, which has kept the P/S subdued. Those who are bullish on Tianjin Jinran Public Utilities will be hoping that this isn't the case, so that they can pick up the stock at a lower valuation.

Is There Some Revenue Growth Forecasted For Tianjin Jinran Public Utilities?

There's an inherent assumption that a company should be matching the industry for P/S ratios like Tianjin Jinran Public Utilities' to be considered reasonable.

Retrospectively, the last year delivered a decent 4.5% gain to the company's revenues. Revenue has also lifted 27% in aggregate from three years ago, partly thanks to the last 12 months of growth. Accordingly, shareholders would have probably been satisfied with the medium-term rates of revenue growth.

Comparing that to the industry, which is predicted to deliver 6.4% growth in the next 12 months, the company's momentum is pretty similar based on recent medium-term annualised revenue results.

In light of this, it's understandable that Tianjin Jinran Public Utilities' P/S sits in line with the majority of other companies. Apparently shareholders are comfortable to simply hold on assuming the company will continue keeping a low profile.

What Does Tianjin Jinran Public Utilities' P/S Mean For Investors?

Its shares have lifted substantially and now Tianjin Jinran Public Utilities' P/S is back within range of the industry median. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

As we've seen, Tianjin Jinran Public Utilities' three-year revenue trends seem to be contributing to its P/S, given they look similar to current industry expectations. Currently, with a past revenue trend that aligns closely wit the industry outlook, shareholders are confident the company's future revenue outlook won't contain any major surprises. Given the current circumstances, it seems improbable that the share price will experience any significant movement in either direction in the near future if recent medium-term revenue trends persist.

Don't forget that there may be other risks. For instance, we've identified 2 warning signs for Tianjin Jinran Public Utilities (1 is a bit concerning) you should be aware of.

If you're unsure about the strength of Tianjin Jinran Public Utilities' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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