Improve Medical Instruments Co., Ltd. (SZSE:300030) shareholders are no doubt pleased to see that the share price has bounced 31% in the last month, although it is still struggling to make up recently lost ground. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 21% over that time.
Even after such a large jump in price, Improve Medical Instruments may still look like a strong buying opportunity at present with its price-to-sales (or "P/S") ratio of 2.5x, considering almost half of all companies in the Life Sciences industry in China have P/S ratios greater than 5.9x and even P/S higher than 9x aren't out of the ordinary. However, the P/S might be quite low for a reason and it requires further investigation to determine if it's justified.
SZSE:300030 Price to Sales Ratio vs Industry March 18th 2024
How Has Improve Medical Instruments Performed Recently?
For example, consider that Improve Medical Instruments' financial performance has been poor lately as its revenue has been in decline. Perhaps the market believes the recent revenue performance isn't good enough to keep up the industry, causing the P/S ratio to suffer. Those who are bullish on Improve Medical Instruments will be hoping that this isn't the case so that they can pick up the stock at a lower valuation.
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Improve Medical Instruments will help you shine a light on its historical performance.
What Are Revenue Growth Metrics Telling Us About The Low P/S?
In order to justify its P/S ratio, Improve Medical Instruments would need to produce anemic growth that's substantially trailing the industry.
Retrospectively, the last year delivered a frustrating 12% decrease to the company's top line. The last three years don't look nice either as the company has shrunk revenue by 17% in aggregate. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.
In contrast to the company, the rest of the industry is expected to grow by 21% over the next year, which really puts the company's recent medium-term revenue decline into perspective.
With this information, we are not surprised that Improve Medical Instruments is trading at a P/S lower than the industry. Nonetheless, there's no guarantee the P/S has reached a floor yet with revenue going in reverse. Even just maintaining these prices could be difficult to achieve as recent revenue trends are already weighing down the shares.
What Does Improve Medical Instruments' P/S Mean For Investors?
Shares in Improve Medical Instruments have risen appreciably however, its P/S is still subdued. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.
It's no surprise that Improve Medical Instruments maintains its low P/S off the back of its sliding revenue over the medium-term. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. Given the current circumstances, it seems unlikely that the share price will experience any significant movement in either direction in the near future if recent medium-term revenue trends persist.
Before you take the next step, you should know about the 2 warning signs for Improve Medical Instruments (1 is concerning!) that we have uncovered.
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.
即使在价格大幅上涨之后,Improve Medical Instruments目前看来仍是一个强劲的买入机会,其市销率(或 “市盈率”)为2.5倍,因为中国生命科学行业几乎有一半的公司的市销率大于5.9倍,即使市盈率高于9倍也并非不寻常。但是,市销率可能很低是有原因的,需要进一步调查以确定其是否合理。
2024 年 3 月 18 日,深圳证券交易所:300030 与行业的市销比率
改善医疗器械最近的表现如何?
例如,假设改善医疗器械由于收入下降而最近财务表现不佳。也许市场认为最近的收入表现不足以维持该行业的步伐,从而导致市销率受到影响。那些看好Imvere Medical Instruments的人希望情况并非如此,这样他们就可以以较低的估值买入该股。
想全面了解公司的收益、收入和现金流吗?然后,我们关于改善医疗器械的免费报告将帮助您了解其历史表现。
收入增长指标告诉我们低市销率有哪些?
为了证明其市销率是合理的,Improve Medical Instruments需要实现大幅落后于该行业的疲软增长。