Home Control International Limited (HKG:1747) shares have had a horrible month, losing 28% after a relatively good period beforehand. For any long-term shareholders, the last month ends a year to forget by locking in a 52% share price decline.
In spite of the heavy fall in price, there still wouldn't be many who think Home Control International's price-to-sales (or "P/S") ratio of 0.2x is worth a mention when the median P/S in Hong Kong's Consumer Durables industry is similar at about 0.5x. 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.
How Home Control International Has Been Performing
Home Control International has been struggling lately as its revenue has declined faster than most other companies. It might be that many expect the dismal revenue performance to revert back to industry averages soon, which has kept the P/S from falling. So while you could say the stock is cheap, investors will be looking for improvement before they see it as good value. If not, then existing shareholders may be a little nervous about the viability of the share price.
Keen to find out how analysts think Home Control International's future stacks up against the industry? In that case, our free report is a great place to start.
How Is Home Control International's Revenue Growth Trending?
The only time you'd be comfortable seeing a P/S like Home Control International's is when the company's growth is tracking the industry closely.
Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 23%. As a result, revenue from three years ago have also fallen 34% overall. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.
Looking ahead now, revenue is anticipated to slump, contracting by 4.8% during the coming year according to the sole analyst following the company. That's not great when the rest of the industry is expected to grow by 35%.
With this in consideration, we think it doesn't make sense that Home Control International's P/S is closely matching its industry peers. It seems most investors are hoping for a turnaround in the company's business prospects, but the analyst cohort is not so confident this will happen. There's a good chance these shareholders are setting themselves up for future disappointment if the P/S falls to levels more in line with the negative growth outlook.
The Bottom Line On Home Control International's P/S
Following Home Control International's share price tumble, its P/S is just clinging on to the industry median P/S. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.
Our check of Home Control International's analyst forecasts revealed that its outlook for shrinking revenue isn't bringing down its P/S as much as we would have predicted. With this in mind, we don't feel the current P/S is justified as declining revenues are unlikely to support a more positive sentiment for long. If we consider the revenue outlook, the P/S seems to indicate that potential investors may be paying a premium for the stock.
And what about other risks? Every company has them, and we've spotted 3 warning signs for Home Control International (of which 2 are potentially serious!) you should know about.
If these risks are making you reconsider your opinion on Home Control International, 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.
Home Control International Limited(HKG: 1747)股價經歷了一個糟糕的月份,在經歷了相對不錯的時期之後下跌了28%。對於任何長期股東來說,最後一個月的股價下跌幅度爲52%,從而結束了令人難忘的一年。
儘管價格大幅下跌,但當香港耐用消費品行業的市盈率中位數約爲0.5倍時,仍然沒有多少人認爲Home Control International的0.2倍市銷率(或 “市盈率”)值得一提。儘管這可能不會引起任何關注,但如果市銷率不合理,投資者可能會錯過潛在的機會或無視迫在眉睫的失望情緒。
國際家居控制協會的表現如何
由於其收入的下降速度快於大多數其他公司,Home Control International最近一直處於困境。許多人可能預計,慘淡的收入表現將很快恢復到行業平均水平,這阻止了市銷售率的下降。因此,儘管你可以說股票很便宜,但投資者在將其視爲物有所值之前會尋求改善。如果不是,那麼現有股東可能會對股價的可行性有些緊張。
想了解分析師如何看待Home Control International的未來與該行業的對立嗎?在這種情況下,我們的免費報告是一個很好的起點。
Home Control International的收入增長趨勢如何?
你唯一能放心地看到像Home Control International這樣的市銷率的時候是公司的增長密切關注該行業的時候。