Transportation Telecommunication & Information Development Inc.Ltd.Zhejiang (SZSE:300469) Shares May Have Slumped 27% But Getting In Cheap Is Still Unlikely
Transportation Telecommunication & Information Development Inc.Ltd.Zhejiang (SZSE:300469) Shares May Have Slumped 27% But Getting In Cheap Is Still Unlikely
Transportation Telecommunication & Information Development Inc.Ltd.Zhejiang (SZSE:300469) 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. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 44% share price drop.
Although its price has dipped substantially, you could still be forgiven for thinking Transportation Telecommunication & Information DevelopmentLtd.Zhejiang is a stock to steer clear of with a price-to-sales ratios (or "P/S") of 11.7x, considering almost half the companies in China's IT industry have P/S ratios below 3.4x. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.
What Does Transportation Telecommunication & Information DevelopmentLtd.Zhejiang's P/S Mean For Shareholders?
For example, consider that Transportation Telecommunication & Information DevelopmentLtd.Zhejiang's financial performance has been poor lately as its revenue has been in decline. One possibility is that the P/S is high because investors think the company will still do enough to outperform the broader industry in the near future. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Transportation Telecommunication & Information DevelopmentLtd.Zhejiang will help you shine a light on its historical performance.
Do Revenue Forecasts Match The High P/S Ratio?
The only time you'd be truly comfortable seeing a P/S as steep as Transportation Telecommunication & Information DevelopmentLtd.Zhejiang's is when the company's growth is on track to outshine the industry decidedly.
In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 15%. The last three years don't look nice either as the company has shrunk revenue by 63% in aggregate. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.
Weighing that medium-term revenue trajectory against the broader industry's one-year forecast for expansion of 25% shows it's an unpleasant look.
With this in mind, we find it worrying that Transportation Telecommunication & Information DevelopmentLtd.Zhejiang's P/S exceeds that of its industry peers. Apparently many investors in the company are way more bullish than recent times would indicate and aren't willing to let go of their stock at any price. There's a very 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
A significant share price dive has done very little to deflate Transportation Telecommunication & Information DevelopmentLtd.Zhejiang's very lofty P/S. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.
Our examination of Transportation Telecommunication & Information DevelopmentLtd.Zhejiang revealed its shrinking revenue over the medium-term isn't resulting in a P/S as low as we expected, given the industry is set to grow. 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. 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 take the next step, you should know about the 2 warning signs for Transportation Telecommunication & Information DevelopmentLtd.Zhejiang that we have uncovered.
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).
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.
Transportation Telecommunication & Information Development Inc.Ltd.Zhejiang (SZSE:300469)股东们看到股价在过去的一个月里经历了惨痛的跌幅,下跌了27%,扼杀了之前的正面表现。在过去的12个月里,持有股份的股东们看到更加糟糕的结果,股价下跌了44%。
尽管Transportation Telecommunication & Information DevelopmentLtd.Zhejiang的股价已经大幅下跌,但考虑到中国IT行业中有将近一半的公司的市销率低于3.4倍,其市销率高达11.7倍,你仍然可以原谅地认为这是一支需要避开的股票。但我们需要深入挖掘,以确定高昂的市销率是否有合理的基础。
Transportation Telecommunication & Information DevelopmentLtd.Zhejiang的市销率对股东意味着什么?
例如,考虑到Transportation Telecommunication & Information DevelopmentLtd.Zhejiang的财务表现近来一直很差,其营业收入一直在下降。有一种可能是市销率较高,因为投资者认为该公司在不久的将来仍然可以在更广泛的行业中表现出色。你真的希望如此,否则你为什么要支付如此巨额的价格呢?
想要了解Transportation Telecommunication & Information DevelopmentLtd.Zhejiang公司的收益、营业收入和现金流的全部情况吗?那么我们为你提供的关于其历史表现的免费报告将会帮助你照亮前方。
营业收入预测是否与高市销率相匹配?
只有当公司的增长有望明显超过行业水平时,你才会真正放心地看到像Transportation Telecommunication & Information DevelopmentLtd.Zhejiang这样高昂的市销率。
考虑到Transportation Telecommunication & Information DevelopmentLtd.Zhejiang的市销率超过其行业同行们,我们感到担忧。显然,公司的很多投资者比最近的情况更加看好,不愿以任何价格抛出股票。如果市销率降至近期负增长率的水平,现有股东们很可能为未来的失望感到不安。
最终结论
股价的大幅下跌几乎没有减弱Transportation Telecommunication & Information DevelopmentLtd.Zhejiang市销率的高昂程度。通常情况下,我们更倾向于将市销率用于确定市场对于公司整体健康状况的看法。
我们对Transportation Telecommunication & Information DevelopmentLtd.Zhejiang的检查显示,其中期营收的下降并未带来我们所期望的市销率降低,考虑到行业增长。随着投资者开始担心营业收入下降的问题,情绪变得更加恶劣,这可能使得市销率回落到我们所期望的水平。如果近期中期营收的趋势持续下去,它将会让股东的投资面临重要风险,而潜在投资者也有可能因为过高的溢价而面临风险。
在你迈出下一步之前,你应该知道我们发现的Transportation Telecommunication & Information DevelopmentLtd.Zhejiang的2个警告信号。