Sun Art Retail Group Limited (HKG:6808) shares have had a really impressive month, gaining 35% after a shaky period beforehand. Still, the 30-day jump doesn't change the fact that longer term shareholders have seen their stock decimated by the 55% share price drop in the last twelve months.
Although its price has surged higher, there still wouldn't be many who think Sun Art Retail Group's price-to-sales (or "P/S") ratio of 0.2x is worth a mention when the median P/S in Hong Kong's Consumer Retailing industry is similar at about 0.6x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.
How Has Sun Art Retail Group Performed Recently?
Sun Art Retail Group hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. One possibility is that the P/S ratio is moderate because investors think this poor revenue performance will turn around. You'd really hope so, otherwise you're paying a relatively elevated price for a company with this sort of growth profile.
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Sun Art Retail Group.
Is There Some Revenue Growth Forecasted For Sun Art Retail Group?
In order to justify its P/S ratio, Sun Art Retail Group would need to produce growth that's similar to the industry.
In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 9.6%. The last three years don't look nice either as the company has shrunk revenue by 19% in aggregate. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.
Turning to the outlook, the next three years should generate growth of 3.7% each year as estimated by the analysts watching the company. Meanwhile, the rest of the industry is forecast to expand by 11% each year, which is noticeably more attractive.
In light of this, it's curious that Sun Art Retail Group's P/S sits in line with the majority of other companies. Apparently many investors in the company are less bearish than analysts indicate and aren't willing to let go of their stock right now. Maintaining these prices will be difficult to achieve as this level of revenue growth is likely to weigh down the shares eventually.
The Bottom Line On Sun Art Retail Group's P/S
Sun Art Retail Group appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry Using the price-to-sales 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.
Given that Sun Art Retail Group's revenue growth projections are relatively subdued in comparison to the wider industry, it comes as a surprise to see it trading at its current P/S ratio. When we see companies with a relatively weaker revenue outlook compared to the industry, we suspect the share price is at risk of declining, sending the moderate P/S lower. Circumstances like this present a risk to current and prospective investors who may see share prices fall if the low revenue growth impacts the sentiment.
Plus, you should also learn about this 1 warning sign we've spotted with Sun Art Retail Group.
It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).
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.
Sun Art Retail Group Limited(HKG: 6808)的股价经历了一个非常令人印象深刻的月份,在经历了动荡时期之后上涨了35%。尽管如此,30天的上涨并没有改变这样一个事实,即在过去十二个月中,长期股东的股票因股价下跌55%而暴跌。
尽管其价格飙升,但当香港消费零售行业的市盈率中位数约为0.6倍时,仍然没有多少人认为Sun Art Retail Group的0.2倍市销率(或 “市盈率”)值得一提。但是,如果市销率没有合理的基础,投资者可能会忽略明显的机会或潜在的挫折。
太阳艺术零售集团最近的表现如何?
Sun Art Retail Group最近表现不佳,其收入下降与其他公司相比表现不佳,后者的平均收入有所增长。一种可能性是市销率适中,因为投资者认为这种糟糕的收入表现将得到扭转。你真的希望如此,否则你会为一家具有这种增长概况的公司付出相对较高的代价。
如果你想了解分析师对未来的预测,你应该查看我们关于Sun Art Retail Group的免费报告。
有鉴于此,奇怪的是,Sun Art Retail Group的市销率与其他多数公司持平。显然,该公司的许多投资者没有分析师所表示的那么看跌,并且不愿意立即放弃股票。维持这些价格将很难实现,因为这种收入增长水平最终可能会压低股价。
Sun Art Retail Group 市销率的底线
Sun Art Retail Group似乎再次受到青睐,股价稳步上涨,使其市销率与业内其他公司保持一致。仅凭市销比来确定是否应该出售股票是不明智的,但它可以作为公司未来前景的实用指南。
鉴于与整个行业相比,Sun Art Retail Group的收入增长预测相对疲软,看到其目前的市销率交易令人惊讶。当我们看到与该行业相比收入前景相对疲软的公司时,我们怀疑股价有下跌的风险,从而使温和的市销售率走低。像这样的情况给当前和潜在的投资者带来了风险,如果低收入增长影响市场情绪,他们可能会看到股价下跌。