Unfortunately for some shareholders, the Tinavi Medical Technologies Co.,Ltd. (SHSE:688277) share price has dived 26% in the last thirty days, prolonging recent pain. For any long-term shareholders, the last month ends a year to forget by locking in a 55% share price decline.
Even after such a large drop in price, given around half the companies in China's Medical Equipment industry have price-to-sales ratios (or "P/S") below 5.8x, you may still consider Tinavi Medical TechnologiesLtd as a stock to avoid entirely with its 16.4x P/S ratio. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.
SHSE:688277 Price to Sales Ratio vs Industry April 17th 2024
What Does Tinavi Medical TechnologiesLtd's Recent Performance Look Like?
With revenue growth that's exceedingly strong of late, Tinavi Medical TechnologiesLtd has been doing very well. The P/S ratio is probably high because investors think this strong revenue growth will be enough to outperform the broader industry in the near future. However, if this isn't the case, investors might get caught out paying too much for the stock.
Although there are no analyst estimates available for Tinavi Medical TechnologiesLtd, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
Do Revenue Forecasts Match The High P/S Ratio?
The only time you'd be truly comfortable seeing a P/S as steep as Tinavi Medical TechnologiesLtd's is when the company's growth is on track to outshine the industry decidedly.
Taking a look back first, we see that the company grew revenue by an impressive 34% last year. The strong recent performance means it was also able to grow revenue by 54% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.
This is in contrast to the rest of the industry, which is expected to grow by 23% over the next year, materially higher than the company's recent medium-term annualised growth rates.
With this information, we find it concerning that Tinavi Medical TechnologiesLtd is trading at a P/S higher than the industry. It seems most investors are ignoring the fairly limited recent growth rates 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 We Can Learn From Tinavi Medical TechnologiesLtd's P/S?
Even after such a strong price drop, Tinavi Medical TechnologiesLtd's P/S still exceeds the industry median significantly. 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.
The fact that Tinavi Medical TechnologiesLtd currently trades on a higher P/S relative to the industry is an oddity, since its recent three-year growth is lower than the wider industry forecast. When we observe slower-than-industry revenue growth alongside a high P/S ratio, we assume there to be a significant risk of the share price decreasing, which would result in a lower P/S ratio. Unless there is a significant improvement in the company's medium-term performance, it will be difficult to prevent the P/S ratio from declining to a more reasonable level.
Having said that, be aware Tinavi Medical TechnologiesLtd is showing 1 warning sign in our investment analysis, you should know about.
If these risks are making you reconsider your opinion on Tinavi Medical TechnologiesLtd, explore our interactive list of high quality stocks to get an idea of what else is out there.
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根据这些信息,我们发现Tinavi Medical TechnologiesLtd的交易市销率高于该行业。看来大多数投资者都忽视了近期相当有限的增长率,并希望公司的业务前景有所好转。只有最大胆的人才会假设这些价格是可持续的,因为近期收入趋势的延续最终可能会严重压制股价。
我们可以从 Tinavi Medical TechnologiesLtd 的市销率中学到什么?
即使价格下跌如此强劲,Tinavi Medical TechnologiesLtd的市销率仍大大超过行业中位数。仅使用市销率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。
相对于该行业,Tinavi Medical TechnologiesLtd目前的市销率更高,这一事实很奇怪,因为其最近三年的增长低于整个行业的预期。当我们观察到收入增长慢于行业且市销率高时,我们假设存在股价下跌的巨大风险,这将导致市销率降低。除非公司的中期业绩有显著改善,否则很难防止市销率下降到更合理的水平。
话虽如此,请注意,你应该知道Tinavi Medical TechnologiesLtd在我们的投资分析中显示了一个警告信号。
如果这些风险让你重新考虑你对Tinavi Medical TechnologiesLtd的看法,请浏览我们的高质量股票互动清单,了解还有什么。