The Dook Media Group Limited (SZSE:301025) share price has softened a substantial 27% over the previous 30 days, handing back much of the gains the stock has made lately. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 33% share price drop.
Even after such a large drop in price, given around half the companies in China's Media industry have price-to-sales ratios (or "P/S") below 2.3x, you may still consider Dook Media Group as a stock to avoid entirely with its 8.6x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so lofty.
What Does Dook Media Group's Recent Performance Look Like?
For example, consider that Dook Media Group's financial performance has been poor lately as its revenue has been in decline. Perhaps the market believes the company can do enough to outperform the rest of the industry in the near future, which is keeping the P/S ratio high. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.
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 Dook Media Group's earnings, revenue and cash flow.
What Are Revenue Growth Metrics Telling Us About The High P/S?
In order to justify its P/S ratio, Dook Media Group would need to produce outstanding growth that's well in excess of the industry.
Retrospectively, the last year delivered a frustrating 14% decrease to the company's top line. This has soured the latest three-year period, which nevertheless managed to deliver a decent 15% overall rise in revenue. So we can start by confirming that the company has generally done a good job of growing revenue over that time, even though it had some hiccups along the way.
Comparing the recent medium-term revenue trends against the industry's one-year growth forecast of 19% shows it's noticeably less attractive.
In light of this, it's alarming that Dook Media Group's P/S sits above the majority of other companies. 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.
The Key Takeaway
Even after such a strong price drop, Dook Media Group'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 Dook Media Group 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 see slower than industry revenue growth but an elevated P/S, there's considerable risk of the share price declining, sending the P/S lower. If recent medium-term revenue trends continue, it will place shareholders' investments at significant risk and potential investors in danger of paying an excessive premium.
Before you settle on your opinion, we've discovered 5 warning signs for Dook Media Group (3 are potentially serious!) that you should be aware of.
If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.
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Dook Media Group Limited(深圳证券交易所代码:301025)的股价在过去30天中大幅下跌了27%,收回了该股最近取得的大部分涨幅。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33%。
即使在价格大幅下跌之后,鉴于中国媒体行业约有一半的公司的市销比(或 “市销率”)低于2.3倍,您仍然可以将Dook Media Group视为完全避开的股票,其市销率为8.6倍。但是,仅按面值计算市销率是不明智的,因为可以解释其为何如此之高。
Dook Media Group 最近的表现是什么样子?
例如,假设Dook Media Group最近由于收入下降而财务表现不佳。也许市场认为该公司有足够的能力在不久的将来跑赢其他行业,从而保持较高的市销率。你真的希望如此,否则你会无缘无故地付出相当大的代价。
我们没有分析师的预测,但您可以查看我们关于Dook Media Group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。