Cloud Live Technology Group Co.,Ltd. (SZSE:002306) shareholders have had their patience rewarded with a 31% share price jump in the last month. Unfortunately, despite the strong performance over the last month, the full year gain of 9.7% isn't as attractive.
Since its price has surged higher, Cloud Live Technology GroupLtd may be sending very bearish signals at the moment with a price-to-sales (or "P/S") ratio of 23.6x, since almost half of all companies in the Entertainment industry in China have P/S ratios under 7.2x and even P/S lower than 3x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.
See our latest analysis for Cloud Live Technology GroupLtd
SZSE:002306 Price to Sales Ratio vs Industry December 28th 2023
What Does Cloud Live Technology GroupLtd's P/S Mean For Shareholders?
Recent times have been quite advantageous for Cloud Live Technology GroupLtd as its revenue has been rising very briskly. It seems that many are expecting the strong revenue performance to beat most other companies over the coming period, which has increased investors' willingness to pay up for the stock. If not, then existing shareholders might be a little nervous about the viability of the share price.
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Cloud Live Technology GroupLtd will help you shine a light on its historical performance.
What Are Revenue Growth Metrics Telling Us About The High P/S?
Cloud Live Technology GroupLtd's P/S ratio would be typical for a company that's expected to deliver very strong growth, and importantly, perform much better than the industry.
If we review the last year of revenue growth, the company posted a terrific increase of 57%. Pleasingly, revenue has also lifted 61% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.
Comparing that to the industry, which is predicted to deliver 36% growth in the next 12 months, the company's momentum is weaker, based on recent medium-term annualised revenue results.
With this in mind, we find it worrying that Cloud Live Technology GroupLtd'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. 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 We Can Learn From Cloud Live Technology GroupLtd's P/S?
Shares in Cloud Live Technology GroupLtd have seen a strong upwards swing lately, which has really helped boost its P/S figure. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.
Our examination of Cloud Live Technology GroupLtd 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. 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 4 warning signs for Cloud Live Technology GroupLtd (2 don't sit too well with us!) that we have uncovered.
If these risks are making you reconsider your opinion on Cloud Live Technology GroupLtd, explore our interactive list of high quality stocks to get an idea of what else is out there.
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.
考慮到這一點,我們感到擔憂的是,Cloud Live Technology GroupLtd的市盈率超過了業內同行。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。
我們可以從Cloud Live Technology GroupLtd的P/S中學到什麼?
最近,Cloud Live Technology GroupLtd的股價強勁上漲,這確實有助於提高其市盈率。通常,在做出投資決策時,我們謹慎行事,不要過多地考慮市售比率,儘管這可以揭示其他市場參與者對公司的看法。
我們對Cloud Live Technology GroupLtd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盈率,因爲它們看起來比當前的行業預期還要糟糕。當我們觀察到收入增長慢於行業且市盈率高時,我們假設存在股價下跌的巨大風險,這將導致市盈率降低。如果最近的中期收入趨勢繼續下去,這將使股東的投資面臨重大風險,潛在投資者面臨支付過高溢價的危險。
在你採取下一步行動之前,你應該了解 Cloud Live Technology GroupLtd 的 4 個警告信號(2 個不要和我們坐得太好!)這是我們發現的。
如果這些風險讓你重新考慮你對Cloud Live Technology GroupLtd的看法,請瀏覽我們的交互式高質量股票清單,了解還有什麼。
對這篇文章有反饋嗎?對內容感到擔憂?直接聯繫我們。 或者,給編輯團隊 (at) simplywallst.com 發送電子郵件。 Simply Wall St 的這篇文章本質上是籠統的。我們僅使用公正的方法提供基於歷史數據和分析師預測的評論,我們的文章並非旨在提供財務建議。它不構成買入或賣出任何股票的建議,也沒有考慮到您的目標或財務狀況。我們的目標是爲您提供由基本數據驅動的長期重點分析。請注意,我們的分析可能不會考慮最新的價格敏感型公司公告或定性材料。華爾街只是沒有持有上述任何股票的頭寸。