Eastone Century Technology Co.,Ltd. (SZSE:300310) shareholders that were waiting for something to happen have been dealt a blow with a 32% share price drop in the last month. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 25% in that time.
In spite of the heavy fall in price, Eastone Century TechnologyLtd may still be sending very bullish signals at the moment with its price-to-sales (or "P/S") ratio of 1x, since almost half of all companies in the IT industry in China have P/S ratios greater than 3.3x and even P/S higher than 6x are not unusual. However, the P/S might be quite low for a reason and it requires further investigation to determine if it's justified.
What Does Eastone Century TechnologyLtd's Recent Performance Look Like?
Revenue has risen at a steady rate over the last year for Eastone Century TechnologyLtd, which is generally not a bad outcome. Perhaps the market believes the recent revenue performance might fall short of industry figures in the near future, leading to a reduced P/S. Those who are bullish on Eastone Century TechnologyLtd will be hoping that this isn't the case, so that they can pick up the stock at a lower valuation.
Although there are no analyst estimates available for Eastone Century TechnologyLtd, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
How Is Eastone Century TechnologyLtd's Revenue Growth Trending?
The only time you'd be truly comfortable seeing a P/S as depressed as Eastone Century TechnologyLtd's is when the company's growth is on track to lag the industry decidedly.
Taking a look back first, we see that the company managed to grow revenues by a handy 3.0% last year. The latest three year period has also seen a 14% overall rise in revenue, aided somewhat by its short-term performance. Therefore, it's fair to say the revenue growth recently has been respectable for the company.
This is in contrast to the rest of the industry, which is expected to grow by 44% over the next year, materially higher than the company's recent medium-term annualised growth rates.
With this in consideration, it's easy to understand why Eastone Century TechnologyLtd's P/S falls short of the mark set by its industry peers. Apparently many shareholders weren't comfortable holding on to something they believe will continue to trail the wider industry.
What We Can Learn From Eastone Century TechnologyLtd's P/S?
Having almost fallen off a cliff, Eastone Century TechnologyLtd's share price has pulled its P/S way down as well. 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.
As we suspected, our examination of Eastone Century TechnologyLtd revealed its three-year revenue trends are contributing to its low P/S, given they look worse than current industry expectations. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. If recent medium-term revenue trends continue, it's hard to see the share price experience a reversal of fortunes anytime soon.
It's always necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Eastone Century TechnologyLtd, and understanding them should be part of your investment process.
It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).
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.
儘管價格大幅下跌,但Eastone Century TechnologyLtd目前可能仍在發出非常看漲的信號,其市銷率(或 “市盈率”)爲1倍,因爲中國IT行業幾乎有一半的公司市盈率大於3.3倍,甚至市盈率高於6倍的情況並不少見。但是,市銷率可能很低是有原因的,需要進一步調查以確定其是否合理。
東通世紀科技有限公司最近的表現如何?
去年,Eastone Century TechnologyLtd的收入穩步增長,這通常不是一個壞結果。也許市場認爲,近期收入表現可能在不久的將來低於行業數據,從而導致市銷率下降。那些看好Eastone Century TechnologyLtd的人會希望情況並非如此,這樣他們就可以以較低的估值買入該股。
儘管沒有分析師對Eastone Century TechnologyLtd的估計,但看看這個免費的數據豐富的可視化圖表,看看該公司如何積累收益、收入和現金流。
東通世紀科技有限公司的收入增長趨勢如何?
只有當公司的增長有望明顯落後於該行業時,你才能真正放心地看到像Eastone Century TechnologyLtd一樣低迷的市銷率。
考慮到這一點,不難理解Eastone Century TechnologyLtd的市銷率爲何未達到業內同行設定的水平。顯然,許多股東不願意堅持他們認爲將繼續落後於整個行業的東西。
我們可以從Eastone Century TechnologyLtd的市銷率中學到什麼?
在差點跌下懸崖之後,Eastone Century TechnologyLtd的股價也大幅下調了市銷率。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。
正如我們所懷疑的那樣,我們對Eastone Century TechnologyLtd的審查顯示,其三年收入趨勢是其低市銷售率的原因,因爲這些趨勢看起來不如當前的行業預期。目前,股東們正在接受低市銷率,因爲他們承認未來的收入可能不會帶來任何驚喜。如果最近的中期收入趨勢繼續下去,就很難看到股價在短期內出現命運逆轉。
始終有必要考慮永遠存在的投資風險幽靈。我們已經向Eastone Century TechnologyLtd確定了3個警告信號,了解它們應該是您投資過程的一部分。