Dragon King Group Holdings Limited (HKG:8493) shares have had a really impressive month, gaining 67% after a shaky period beforehand. This latest share price bounce rounds out a remarkable 350% gain over the last twelve months.
In spite of the firm bounce in price, you could still be forgiven for feeling indifferent about Dragon King Group Holdings' P/S ratio of 0.5x, since the median price-to-sales (or "P/S") ratio for the Hospitality industry in Hong Kong is also close to 0.8x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.
SEHK:8493 Price to Sales Ratio vs Industry June 26th 2024
How Dragon King Group Holdings Has Been Performing
Recent times have been quite advantageous for Dragon King Group Holdings as its revenue has been rising very briskly. Perhaps the market is expecting future revenue performance to taper off, which has kept the P/S from rising. If that doesn't eventuate, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.
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 Dragon King Group Holdings' earnings, revenue and cash flow.
What Are Revenue Growth Metrics Telling Us About The P/S?
In order to justify its P/S ratio, Dragon King Group Holdings would need to produce growth that's similar to the industry.
If we review the last year of revenue growth, the company posted a terrific increase of 31%. However, this wasn't enough as the latest three year period has seen the company endure a nasty 47% drop in revenue in aggregate. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.
Weighing that medium-term revenue trajectory against the broader industry's one-year forecast for expansion of 19% shows it's an unpleasant look.
With this information, we find it concerning that Dragon King Group Holdings is trading at a fairly similar P/S compared to the industry. It seems most investors are ignoring the recent poor growth rate and are hoping for a turnaround in the company's business prospects. There's a good chance existing shareholders are setting themselves up for future disappointment if the P/S falls to levels more in line with the recent negative growth rates.
The Final Word
Dragon King Group Holdings' stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.
Our look at Dragon King Group Holdings revealed its shrinking revenues over the medium-term haven't impacted the P/S as much as we anticipated, given the industry is set to grow. When we see revenue heading backwards in the context of growing industry forecasts, it'd make sense to expect a possible share price decline on the horizon, sending the moderate P/S lower. Unless the recent medium-term conditions improve markedly, investors will have a hard time accepting the share price as fair value.
Plus, you should also learn about these 6 warning signs we've spotted with Dragon King Group Holdings (including 4 which are significant).
If these risks are making you reconsider your opinion on Dragon King Group Holdings, explore our interactive list of high quality stocks to get an idea of what else is out there.
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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Dragon King Group Holdings Limited (HKG:8493)股票经历过动荡期后,上个月涨幅惊人,上涨了67%。最新的涨幅使其过去12个月的涨幅总额达到了惊人的350%。
尽管股价反弹,但是Dragon King Group Holdings的市销率仍然只有0.5x,与香港酒店行业的中位数市销率接近0.8x。尽管如此,不明确解释市销率会让投资者忽略一个明显的机会或昂贵的错误。
SEHK:8493市销率与行业对比(2024年6月26日)
Dragon King Group Holdings的表现
近期对Dragon King Group Holdings来说相当有利,其营业收入增长非常迅速。也许市场预计未来的营收表现将趋缓,所以市销率没有上涨。如果那并没有发生,那么现有股东有理由对股票价格未来的走向感到乐观。
我们没有分析师预测,但可以通过免费的Dragon King Group Holdings收益、营业收入和现金流报告来了解最近的趋势,来为未来埋下伏笔。
有了这些信息,我们发现Dragon King Group Holdings的市销率与行业相当。似乎大多数投资者忽略了最近的低增长率,并希望公司的业务前景会出现反转。如果市销率下降到与最近的负增长率相一致的水平,那么现有的股东有可能会在未来失望。
最终结论
Dragon King Group Holdings的股票最近有很大的势头,使其市销率与行业水平持平。通常情况下,当做投资决策时,我们不会过多考虑市销率,但它可以揭示其他市场参与者对公司的看法。
我们分析了Dragon King Group Holdings后发现,虽然其营收中期内一直在下降,但其市销率并没有像我们预想的那样下降,而是与行业增长相同。当我们发现营收在增长的行业背景下出现逆势下滑时,合理的预期是股票价格可能会下跌,市销率会适度下降。除非最近中期的情况得到明显改善,否则投资者很难接受当前的股票价格为合理价值。
此外,还应该了解我们发现的Dragon King Group Holdings的6个警告信号(包括4个重要信号)。
如果这些风险让您重新考虑对Dragon King Group Holdings的看法,请查看我们的高质量股票互动列表,以了解其他投资机会。