TL Natural Gas Holdings Limited (HKG:8536) shares have continued their recent momentum with a 52% gain in the last month alone. This latest share price bounce rounds out a remarkable 308% gain over the last twelve months.
After such a large jump in price, when almost half of the companies in Hong Kong's Specialty Retail industry have price-to-sales ratios (or "P/S") below 0.4x, you may consider TL Natural Gas Holdings as a stock probably not worth researching with its 1.2x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's as high as it is.
View our latest analysis for TL Natural Gas Holdings
What Does TL Natural Gas Holdings' Recent Performance Look Like?
The revenue growth achieved at TL Natural Gas Holdings 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.
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on TL Natural Gas Holdings will help you shine a light on its historical performance.
How Is TL Natural Gas Holdings' Revenue Growth Trending?
There's an inherent assumption that a company should outperform the industry for P/S ratios like TL Natural Gas Holdings' to be considered reasonable.
Retrospectively, the last year delivered an exceptional 25% gain to the company's top line. The latest three year period has also seen an excellent 39% overall rise in revenue, aided by its short-term performance. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.
Comparing the recent medium-term revenue trends against the industry's one-year growth forecast of 17% shows it's noticeably less attractive.
With this information, we find it concerning that TL Natural Gas Holdings is trading at a P/S higher than the industry. 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. 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.
The Key Takeaway
TL Natural Gas Holdings' P/S is on the rise since its shares have risen strongly. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.
Our examination of TL Natural Gas Holdings revealed its poor three-year revenue trends aren't detracting from the P/S as much as we though, given they look worse than current industry expectations. When we observe slower-than-industry revenue growth alongside a high P/S ratio, we assume there to be a significant risk of the share price decreasing, which would result in a lower P/S ratio. Unless the recent medium-term conditions improve markedly, it's very challenging to accept these the share price as being reasonable.
Don't forget that there may be other risks. For instance, we've identified 3 warning signs for TL Natural Gas Holdings (2 make us uncomfortable) you should be aware of.
If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.
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根據這些信息,我們發現TL Natural Gas Holdings的市銷率高於該行業。顯然,該公司的許多投資者比最近所表示的要看漲得多,他們不願意以任何價格拋售股票。只有最大膽的人才會假設這些價格是可持續的,因爲近期收入趨勢的延續最終可能會嚴重壓制股價。
關鍵要點
自股價強勁上漲以來,TL Natural Gas Holdings的市銷率一直在上升。僅使用市銷率來確定是否應該出售股票是不明智的,但它可以作爲公司未來前景的實用指南。
我們對TL Natural Gas Holdings的審查顯示,其糟糕的三年收入趨勢並沒有像我們那樣影響市銷率,因爲它們看起來比當前的行業預期還要差。當我們觀察到收入增長慢於行業且市銷率高時,我們假設存在股價下跌的巨大風險,這將導致市銷率降低。除非最近的中期狀況明顯改善,否則很難接受這些股價的合理性。
別忘了可能還有其他風險。例如,我們已經確定了TL Natural Gas Holdings的3個警告信號(2個讓我們感到不舒服),你應該注意。