Reliance Global Holdings Limited (HKG:723) shares have continued their recent momentum with a 42% gain in the last month alone. The last month tops off a massive increase of 240% in the last year.
Even after such a large jump in price, there still wouldn't be many who think Reliance Global Holdings' price-to-sales (or "P/S") ratio of 1.2x is worth a mention when the median P/S in Hong Kong's Forestry industry is similar at about 0.9x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.
SEHK:723 Price to Sales Ratio vs Industry December 18th 2024
What Does Reliance Global Holdings' Recent Performance Look Like?
For instance, Reliance Global Holdings' receding revenue in recent times would have to be some food for thought. Perhaps investors believe the recent revenue performance is enough to keep in line with the industry, which is keeping the P/S from dropping off. If not, then existing shareholders may be a little nervous about the viability 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 Reliance Global Holdings' earnings, revenue and cash flow.
How Is Reliance Global Holdings' Revenue Growth Trending?
There's an inherent assumption that a company should be matching the industry for P/S ratios like Reliance Global Holdings' to be considered reasonable.
Retrospectively, the last year delivered a frustrating 2.3% decrease to the company's top line. As a result, revenue from three years ago have also fallen 59% overall. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.
In contrast to the company, the rest of the industry is expected to grow by 12% over the next year, which really puts the company's recent medium-term revenue decline into perspective.
In light of this, it's somewhat alarming that Reliance Global Holdings' P/S sits in line with 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. 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 Bottom Line On Reliance Global Holdings' P/S
Reliance Global Holdings' stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. 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.
We find it unexpected that Reliance Global Holdings trades at a P/S ratio that is comparable to the rest of the industry, despite experiencing declining revenues during the medium-term, while the industry as a whole is expected 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 the circumstances surrounding the recent medium-term improve, it wouldn't be wrong to expect a a difficult period ahead for the company's shareholders.
Before you settle on your opinion, we've discovered 4 warning signs for Reliance Global Holdings (2 are a bit unpleasant!) that you should be aware of.
If you're unsure about the strength of Reliance Global Holdings' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.
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考虑到这一点,Reliance Global Holdings的市销率与大多数其他公司相当,这令人感到稍微担忧。似乎大多数投资者忽视了近期糟糕的增长率,并在希望公司业务前景能出现转机。如果市销率降到与最近的负增长率相符的水平,现有股东很可能正在为未来的失望做准备。
关于Reliance Global Holdings的市销率的结论
Reliance Global Holdings的股票最近具有很强的动能,这使得其市销率与其他行业板块持平。通常,我们更倾向于将市销率的使用限制在评估市场对公司整体健康状况的看法上。
我们发现,尽管在中期经历了营业收入下降,Reliance Global Holdings的市销率却与其他行业板块相当,这一点令人意外,而该行业整体预计将会增长。当我们看到营业收入在行业增长预期的背景下出现下滑时,期待股价可能下跌是合理的,从而使得适度的市销率降低。除非近期的中期形势改善,否则不妨期待公司的股东将面临一段困难时期。
在你形成看法之前,我们发现了4个需要注意的Reliance Global Holdings的警示信号(其中2个有点令人不快!)。
如果你对Reliance Global Holdings的业务实力不太确定,何不探索我们互动的股票列表,看看其他一些你可能错过的具有良好业务基础的公司。