Home Control International Limited (HKG:1747) shares have had a horrible month, losing 28% after a relatively good period beforehand. For any long-term shareholders, the last month ends a year to forget by locking in a 52% share price decline.
In spite of the heavy fall in price, there still wouldn't be many who think Home Control International'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 Durables industry is similar at about 0.5x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.
How Home Control International Has Been Performing
Home Control International has been struggling lately as its revenue has declined faster than most other companies. It might be that many expect the dismal revenue performance to revert back to industry averages soon, which has kept the P/S from falling. So while you could say the stock is cheap, investors will be looking for improvement before they see it as good value. If not, then existing shareholders may be a little nervous about the viability of the share price.
Keen to find out how analysts think Home Control International's future stacks up against the industry? In that case, our free report is a great place to start.
How Is Home Control International's Revenue Growth Trending?
The only time you'd be comfortable seeing a P/S like Home Control International's is when the company's growth is tracking the industry closely.
Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 23%. As a result, revenue from three years ago have also fallen 34% overall. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.
Looking ahead now, revenue is anticipated to slump, contracting by 4.8% during the coming year according to the sole analyst following the company. That's not great when the rest of the industry is expected to grow by 35%.
With this in consideration, we think it doesn't make sense that Home Control International's P/S is closely matching its industry peers. It seems most investors are hoping for a turnaround in the company's business prospects, but the analyst cohort is not so confident this will happen. There's a good chance these shareholders are setting themselves up for future disappointment if the P/S falls to levels more in line with the negative growth outlook.
The Bottom Line On Home Control International's P/S
Following Home Control International's share price tumble, its P/S is just clinging on to the industry median P/S. 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.
Our check of Home Control International's analyst forecasts revealed that its outlook for shrinking revenue isn't bringing down its P/S as much as we would have predicted. With this in mind, we don't feel the current P/S is justified as declining revenues are unlikely to support a more positive sentiment for long. If we consider the revenue outlook, the P/S seems to indicate that potential investors may be paying a premium for the stock.
And what about other risks? Every company has them, and we've spotted 3 warning signs for Home Control International (of which 2 are potentially serious!) you should know about.
If these risks are making you reconsider your opinion on Home Control International, explore our interactive list of high quality stocks to get an idea of what else is out there.
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.
Home Control International Limited(HKG: 1747)股价经历了一个糟糕的月份,在经历了相对不错的时期之后下跌了28%。对于任何长期股东来说,最后一个月的股价下跌幅度为52%,从而结束了令人难忘的一年。
尽管价格大幅下跌,但当香港耐用消费品行业的市盈率中位数约为0.5倍时,仍然没有多少人认为Home Control International的0.2倍市销率(或 “市盈率”)值得一提。尽管这可能不会引起任何关注,但如果市销率不合理,投资者可能会错过潜在的机会或无视迫在眉睫的失望情绪。
国际家居控制协会的表现如何
由于其收入的下降速度快于大多数其他公司,Home Control International最近一直处于困境。许多人可能预计,惨淡的收入表现将很快恢复到行业平均水平,这阻止了市销售率的下降。因此,尽管你可以说股票很便宜,但投资者在将其视为物有所值之前会寻求改善。如果不是,那么现有股东可能会对股价的可行性有些紧张。
想了解分析师如何看待Home Control International的未来与该行业的对立吗?在这种情况下,我们的免费报告是一个很好的起点。
Home Control International的收入增长趋势如何?
你唯一能放心地看到像Home Control International这样的市销率的时候是公司的增长密切关注该行业的时候。