Fanli Digital Technology Co.,Ltd (SHSE:600228) shareholders have had their patience rewarded with a 27% share price jump in the last month. Looking back a bit further, it's encouraging to see the stock is up 42% in the last year.
Since its price has surged higher, Fanli Digital TechnologyLtd's price-to-sales (or "P/S") ratio of 18.1x might make it look like a strong sell right now compared to other companies in the Interactive Media and Services industry in China, where around half of the companies have P/S ratios below 6.5x and even P/S below 3x are quite common. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so lofty.
View our latest analysis for Fanli Digital TechnologyLtd
SHSE:600228 Price to Sales Ratio vs Industry December 6th 2023
How Has Fanli Digital TechnologyLtd Performed Recently?
For example, consider that Fanli Digital TechnologyLtd's financial performance has been poor lately as its revenue has been in decline. It might be that many expect the company to still outplay most other companies over the coming period, which has kept the P/S from collapsing. However, if this isn't the case, investors might get caught out paying too much for the stock.
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Fanli Digital TechnologyLtd will help you shine a light on its historical performance.
Is There Enough Revenue Growth Forecasted For Fanli Digital TechnologyLtd?
There's an inherent assumption that a company should far outperform the industry for P/S ratios like Fanli Digital TechnologyLtd's to be considered reasonable.
In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 30%. As a result, revenue from three years ago have also fallen 31% overall. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.
In contrast to the company, the rest of the industry is expected to grow by 12% over the next year, which really puts the company's recent medium-term revenue decline into perspective.
With this in mind, we find it worrying that Fanli Digital TechnologyLtd's P/S exceeds that of its industry peers. It seems most investors are ignoring the recent poor growth rate and are hoping for a turnaround in the company's business prospects. Only the boldest would assume these prices are sustainable as a continuation of recent revenue trends is likely to weigh heavily on the share price eventually.
What Does Fanli Digital TechnologyLtd's P/S Mean For Investors?
Shares in Fanli Digital TechnologyLtd have seen a strong upwards swing lately, which has really helped boost its P/S figure. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.
We've established that Fanli Digital TechnologyLtd currently trades on a much higher than expected P/S since its recent revenues have been in decline over the medium-term. Right now we aren't comfortable with the high P/S as this revenue performance is highly unlikely to support such positive sentiment for long. Unless the the circumstances surrounding the recent medium-term improve, it wouldn't be wrong to expect a a difficult period ahead for the company's shareholders.
Before you settle on your opinion, we've discovered 2 warning signs for Fanli Digital TechnologyLtd that you should be aware of.
Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.
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.
由于价格飙升,Fanli Digital TechnologyLtd的市盈率(或 “市盈率”)为18.1倍,与中国互动媒体和服务行业的其他公司相比,目前看上去很强劲。在中国,大约有一半的公司的市盈率低于6.5倍,甚至市盈率低于3倍也很常见。但是,仅按面值计算市盈率是不明智的,因为可以解释为什么市盈率如此之高。
查看我们对Fanli数字科技有限公司的最新分析
SHSE: 600228 市销比与行业的对比 2023 年 12 月 6 日
泛立数码科技有限公司最近的表现如何?
例如,考虑到Fanli Digital TechnologyLtd最近的财务表现不佳,其收入一直在下降。许多人可能预计,在未来一段时间内,该公司的表现仍将超过大多数其他公司,这阻止了市盈率暴跌。但是,如果不是这样,投资者可能会被困为股票支付过多的费用。
想全面了解公司的收益、收入和现金流吗?然后,我们关于Fanli Digital TechnologyLtd的免费报告将帮助您了解其历史表现。
Fanli Digital TechnologyLtd的收入增长预测是否足够?
人们固有的假设是,如果像Fanli Digital TechnologyLtd这样的市盈率被认为是合理的,一家公司的表现应该远远超过该行业。