SSAW Hotels & Resorts Group Co.,Ltd. (SZSE:301073) shareholders won't be pleased to see that the share price has had a very rough month, dropping 27% and undoing the prior period's positive performance. 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, SSAW Hotels & Resorts GroupLtd may still be sending bearish signals at the moment with its price-to-sales (or "P/S") ratio of 6x, since almost half of all companies in the Hospitality in China have P/S ratios under 4.9x and even P/S lower than 1.9x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the elevated P/S.
How SSAW Hotels & Resorts GroupLtd Has Been Performing
Recent times haven't been great for SSAW Hotels & Resorts GroupLtd as its revenue has been rising slower than most other companies. Perhaps the market is expecting future revenue performance to undergo a reversal of fortunes, which has elevated the P/S ratio. However, if this isn't the case, investors might get caught out paying too much for the stock.
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What Are Revenue Growth Metrics Telling Us About The High P/S?
There's an inherent assumption that a company should outperform the industry for P/S ratios like SSAW Hotels & Resorts GroupLtd's to be considered reasonable.
Retrospectively, the last year delivered an exceptional 59% gain to the company's top line. Pleasingly, revenue has also lifted 117% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.
Turning to the outlook, the next year should generate growth of 37% as estimated by the four analysts watching the company. That's shaping up to be materially higher than the 28% growth forecast for the broader industry.
With this in mind, it's not hard to understand why SSAW Hotels & Resorts GroupLtd's P/S is high relative to its industry peers. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.
The Bottom Line On SSAW Hotels & Resorts GroupLtd's P/S
Despite the recent share price weakness, SSAW Hotels & Resorts GroupLtd's P/S remains higher than most other companies in the industry. 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.
As we suspected, our examination of SSAW Hotels & Resorts GroupLtd's analyst forecasts revealed that its superior revenue outlook is contributing to its high P/S. At this stage investors feel the potential for a deterioration in revenues is quite remote, justifying the elevated P/S ratio. It's hard to see the share price falling strongly in the near future under these circumstances.
You always need to take note of risks, for example - SSAW Hotels & Resorts GroupLtd has 3 warning signs we think you should be aware of.
If you're unsure about the strength of SSAW Hotels & Resorts GroupLtd's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.
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.
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SSAW Hotels & Resorts Group Co., Ltd.(SZSE:301073)的股东们对股价表现不太满意,某个月份股价暴跌27%,抵消了上一个时期的积极表现。对于任何长期持股人来说,过去一个月让人难以忘怀,因为其股价下跌了52%。
尽管SSAW Hotels & Resorts Group Ltd的股价大幅下跌,但其市销率(或“P/S”)仍可能正在发出消极信号。在中国酒店行业中,几乎一半的公司的市销率低于4.9倍,甚至低于1.9倍的市销率也并不罕见。然而,我们需要深入挖掘,以确定升高的市销率是否有合理的基础。
SSAW Hotels & Resorts Group Ltd的绩效表现如何
近期以来,SSAW Hotels & Resorts Group Ltd的营业收入增长速度一直低于大多数其他公司;也许市场正在预期未来的营收表现将逆转,这就使市销率上升了。然而,如果情况并非如此,那么投资者可能会因为为该股投资过高的价格而付出代价。
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收入增长指标对于高市销率有何预示?
存在这样一种固有假设:一家公司的市销率要被认为是合理的,就必须要在行业中表现出色,SSAW Hotels & Resorts Group Ltd也不例外。