The HY Energy Group Co.,Ltd (SHSE:600387) share price has fared very poorly over the last month, falling by a substantial 28%. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 35% share price drop.
Even after such a large drop in price, it would still be understandable if you think HY Energy GroupLtd is a stock with good investment prospects with a price-to-sales ratios (or "P/S") of 0.6x, considering almost half the companies in China's Oil and Gas industry have P/S ratios above 1.3x. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.
What Does HY Energy GroupLtd's P/S Mean For Shareholders?
For instance, HY Energy GroupLtd's receding revenue in recent times would have to be some food for thought. It might be that many expect the disappointing revenue performance to continue or accelerate, which has repressed the P/S. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.
We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on HY Energy GroupLtd's earnings, revenue and cash flow.
Do Revenue Forecasts Match The Low P/S Ratio?
The only time you'd be truly comfortable seeing a P/S as low as HY Energy GroupLtd's is when the company's growth is on track to lag the industry.
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 53%. The last three years don't look nice either as the company has shrunk revenue by 46% in aggregate. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.
Weighing that medium-term revenue trajectory against the broader industry's one-year forecast for expansion of 4.6% shows it's an unpleasant look.
In light of this, it's understandable that HY Energy GroupLtd's P/S would sit below the majority of other companies. 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.
The Final Word
HY Energy GroupLtd's recently weak share price has pulled its P/S back below other Oil and Gas companies. 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.
Our examination of HY Energy GroupLtd confirms that the company's shrinking revenue over the past medium-term is a key factor in its low price-to-sales ratio, given the industry is projected to grow. 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.
Don't forget that there may be other risks. For instance, we've identified 2 warning signs for HY Energy GroupLtd (1 shouldn't be ignored) you should be aware of.
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.
HY 能源集团有限公司, Ltd(上海证券交易所代码:600387)的股价在上个月表现非常糟糕,大幅下跌了28%。在过去十二个月中已经持股的股东没有获得回报,反而坐视股价下跌了35%。
即使在价格大幅下跌之后,考虑到中国石油和天然气行业中将近一半的公司的市销率高于1.3倍,你认为HY Energy GroupLtd是一只具有良好投资前景的股票,其市销率(或 “市盈率”)为0.6倍,还是可以理解的。但是,仅按面值计算市销率是不明智的,因为可以解释其有限的原因。
HY Energy GroupLtd的市销率对股东意味着什么?
例如,HY Energy GroupLtd最近收入的下降值得深思。许多人可能预计,令人失望的收入表现将持续或加速,这抑制了市销率。如果你喜欢这家公司,你会希望情况并非如此,这样你就有可能在股票失宠的时候买入一些股票。
我们没有分析师的预测,但您可以查看我们关于HY Energy GroupLtd收益、收入和现金流的免费报告,了解最近的趋势如何为公司未来做好准备。
收入预测与低市销率相匹配吗?
只有当公司的增长有望落后于该行业时,你才能真正放心地看到像HY Energy GroupLtd一样低的市销率。