Anhui Jiuhuashan Tourism Development Co., Ltd. (SHSE:603199) shares have continued their recent momentum with a 26% gain in the last month alone. Looking back a bit further, it's encouraging to see the stock is up 30% in the last year.

Although its price has surged higher, there still wouldn't be many who think Anhui Jiuhuashan Tourism Development's price-to-sales (or "P/S") ratio of 5.9x is worth a mention when the median P/S in China's Hospitality industry is similar at about 6x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

See our latest analysis for Anhui Jiuhuashan Tourism Development

How Has Anhui Jiuhuashan Tourism Development Performed Recently?

Anhui Jiuhuashan Tourism Development's revenue growth of late has been pretty similar to most other companies. It seems that many are expecting the mediocre revenue performance to persist, which has held the P/S ratio back. Those who are bullish on Anhui Jiuhuashan Tourism Development will be hoping that revenue performance can pick up, so that they can pick up the stock at a slightly lower valuation.

Is There Some Revenue Growth Forecasted For Anhui Jiuhuashan Tourism Development?

Anhui Jiuhuashan Tourism Development's P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.

Retrospectively, the last year delivered an exceptional 78% gain to the company's top line. The strong recent performance means it was also able to grow revenue by 96% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Turning to the outlook, the next year should generate growth of 26% as estimated by the lone analyst watching the company. That's shaping up to be materially lower than the 38% growth forecast for the broader industry.

With this information, we find it interesting that Anhui Jiuhuashan Tourism Development is trading at a fairly similar P/S compared to the industry. Apparently many investors in the company are less bearish than analysts indicate and aren't willing to let go of their stock right now. Maintaining these prices will be difficult to achieve as this level of revenue growth is likely to weigh down the shares eventually.

The Final Word

Its shares have lifted substantially and now Anhui Jiuhuashan Tourism Development's P/S is back within range of the industry median. 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.

Our look at the analysts forecasts of Anhui Jiuhuashan Tourism Development's revenue prospects has shown that its inferior revenue outlook isn't negatively impacting its P/S as much as we would have predicted. When we see companies with a relatively weaker revenue outlook compared to the industry, we suspect the share price is at risk of declining, sending the moderate P/S lower. This places shareholders' investments at risk and potential investors in danger of paying an unnecessary premium.

Many other vital risk factors can be found on the company's balance sheet. Take a look at our free balance sheet analysis for Anhui Jiuhuashan Tourism Development with six simple checks on some of these key factors.

If you're unsure about the strength of Anhui Jiuhuashan Tourism Development's 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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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.