V.S. International Group Limited (HKG:1002) shareholders won't be pleased to see that the share price has had a very rough month, dropping 28% and undoing the prior period's positive performance. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 13% in that time.
Although its price has dipped substantially, when almost half of the companies in Hong Kong's Machinery industry have price-to-sales ratios (or "P/S") below 0.7x, you may still consider V.S. International Group as a stock probably not worth researching with its 2x P/S ratio. However, the P/S might be high for a reason and it requires further investigation to determine if it's justified.
How Has V.S. International Group Performed Recently?
The revenue growth achieved at V.S. International Group over the last year would be more than acceptable for most companies. Perhaps the market is expecting this decent revenue performance to beat out the industry over the near term, which has kept the P/S propped up. However, if this isn't the case, investors might get caught out paying too much for the stock.
Although there are no analyst estimates available for V.S. International Group, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
Do Revenue Forecasts Match The High P/S Ratio?
In order to justify its P/S ratio, V.S. International Group would need to produce impressive growth in excess of the industry.
If we review the last year of revenue growth, the company posted a worthy increase of 7.9%. Still, lamentably revenue has fallen 80% in aggregate from three years ago, which is disappointing. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.
Comparing that to the industry, which is predicted to deliver 14% growth in the next 12 months, the company's downward momentum based on recent medium-term revenue results is a sobering picture.
In light of this, it's alarming that V.S. International Group's P/S sits above the majority of other companies. It seems most investors are ignoring the recent poor growth rate 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.
What Does V.S. International Group's P/S Mean For Investors?
There's still some elevation in V.S. International Group's P/S, even if the same can't be said for its share price recently. 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.
We've established that V.S. International Group currently trades on a much higher than expected P/S since its recent revenues have been in decline over the medium-term. With a revenue decline on investors' minds, the likelihood of a souring sentiment is quite high which could send the P/S back in line with what we'd expect. Should recent medium-term revenue trends persist, it would pose a significant risk to existing shareholders' investments and prospective investors will have a hard time accepting the current value of the stock.
You always need to take note of risks, for example - V.S. International Group has 3 warning signs we think you should be aware of.
If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).
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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
V.S. International Group Limited (HKG:1002)的股东们将不会满意看到股价经历了非常艰难的一个月,下降了28%,从而取消了上一个时期的积极表现。在过去的30天里,股价下跌了13%,为股东度过了艰难的一年。
虽然V.S. International Group的价格已经大幅下跌,但当几乎一半的香港机械行业公司的市销率低于0.7倍时,你可能仍然认为V.S. International Group的2倍市销率不值得研究。但是,市销率可能之所以高,需要进一步调查来判断是否合理。
V.S. International Group最近的表现如何?
V.S. International Group在过去一年中实现的营收增长对于大多数公司来说都是可以接受的。也许市场预计这种不错的营收表现将在近期超越行业,这使得市销率保持在高位。然而,如果这不是事实,投资者可能会为该股票支付过高价格而受到损失。
尽管没有V.S. International Group的分析师预测数据,但可以查看这个免费的数据丰富的可视化工具来了解该公司在收益、营收和现金流方面的情况。
营业收入预测是否与高市销率相匹配?
为了证明其市销率的合理性,V.S. International Group需要在业务增长方面表现出令人印象深刻的超常表现。