The Home Control International Limited (HKG:1747) share price has done very well over the last month, posting an excellent gain of 39%. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 17% over that time.
Even after such a large jump in price, it's still not a stretch to say that Home Control International's price-to-sales (or "P/S") ratio of 0.3x right now seems quite "middle-of-the-road" compared to the Consumer Durables industry in Hong Kong, where the median P/S ratio is around 0.5x. 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.
What Does Home Control International's P/S Mean For Shareholders?
Home Control International could be doing better as its revenue has been going backwards lately while most other companies have been seeing positive revenue growth. It might be that many expect the dour revenue performance to strengthen positively, which has kept the P/S from falling. You'd really hope so, otherwise you're paying a relatively elevated price for a company with this sort of growth profile.
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Home Control International.
What Are Revenue Growth Metrics Telling Us About The P/S?
Home Control International's P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.
In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 20%. As a result, revenue from three years ago have also fallen 25% overall. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.
Shifting to the future, estimates from the sole analyst covering the company suggest revenue should grow by 7.7% per annum over the next three years. That's shaping up to be materially lower than the 11% per annum growth forecast for the broader industry.
In light of this, it's curious that Home Control International's P/S sits in line with the majority of other companies. It seems most investors are ignoring the fairly limited growth expectations and are willing to pay up for exposure to the stock. These shareholders may be setting themselves up for future disappointment if the P/S falls to levels more in line with the growth outlook.
The Bottom Line On Home Control International's P/S
Home Control International's stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.
Given that Home Control International's revenue growth projections are relatively subdued in comparison to the wider industry, it comes as a surprise to see it trading at its current P/S ratio. At present, we aren't confident in the P/S as the predicted future revenues aren't likely to support a more positive sentiment for long. Circumstances like this present a risk to current and prospective investors who may see share prices fall if the low revenue growth impacts the sentiment.
Don't forget that there may be other risks. For instance, we've identified 3 warning signs for Home Control International (2 are concerning) you should be aware of.
Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
在过去一个月里,Home Control International Limited (HKG:1747)股价表现非常出色,增长了39%。不幸的是,上个月的收益对于去年的亏损几乎没有任何帮助,因为股票在此期间仍下跌了17%。
即使价格上涨如此之大,仍然不能说Home Control International的市销率(或“P/S”)目前的0.3倍似乎与香港耐用消费品行业相比相当“中庸”。其中,中位数市销率约为0.5倍。虽然,不能简单地无视P/S而没有解释,因为投资者可能正在忽略一个独特的机会或一个昂贵的错误。
Home Control International的市销率对股东意味着什么?
随着其营收不断下滑,Home Control International未能取得更好的表现,而大多数其他公司的营收增长都持续看好。可能会有很多人预计消沉的收入表现会逐步变好,这使得P/S没有下跌。你真的希望如此,因为否则你为这种增长率的公司支付了相对较高的价格。如果您想查看分析师对Home Control International未来的预测,请查看我们的免费报告。
如果您想查看分析师对Home Control International的预测,请查看我们的免费报告。
营业收入增长指标告诉我们市销率的情况如何?
Home Control International的市销率将是一家只预计实现适度增长并且重要的公司类型的典型水平,与行业发展持平。