Improve Medical Instruments Co., Ltd. (SZSE:300030) shareholders are no doubt pleased to see that the share price has bounced 31% in the last month, although it is still struggling to make up recently lost ground. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 21% over that time.
Even after such a large jump in price, Improve Medical Instruments may still look like a strong buying opportunity at present with its price-to-sales (or "P/S") ratio of 2.5x, considering almost half of all companies in the Life Sciences industry in China have P/S ratios greater than 5.9x and even P/S higher than 9x aren't out of the ordinary. However, the P/S might be quite low for a reason and it requires further investigation to determine if it's justified.
SZSE:300030 Price to Sales Ratio vs Industry March 18th 2024
How Has Improve Medical Instruments Performed Recently?
For example, consider that Improve Medical Instruments' financial performance has been poor lately as its revenue has been in decline. Perhaps the market believes the recent revenue performance isn't good enough to keep up the industry, causing the P/S ratio to suffer. Those who are bullish on Improve Medical Instruments will be hoping that this isn't the case so that they can pick up the stock at a lower valuation.
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Improve Medical Instruments will help you shine a light on its historical performance.
What Are Revenue Growth Metrics Telling Us About The Low P/S?
In order to justify its P/S ratio, Improve Medical Instruments would need to produce anemic growth that's substantially trailing the industry.
Retrospectively, the last year delivered a frustrating 12% decrease to the company's top line. The last three years don't look nice either as the company has shrunk revenue by 17% in aggregate. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.
In contrast to the company, the rest of the industry is expected to grow by 21% over the next year, which really puts the company's recent medium-term revenue decline into perspective.
With this information, we are not surprised that Improve Medical Instruments is trading at a P/S lower than the industry. Nonetheless, there's no guarantee the P/S has reached a floor yet with revenue going in reverse. Even just maintaining these prices could be difficult to achieve as recent revenue trends are already weighing down the shares.
What Does Improve Medical Instruments' P/S Mean For Investors?
Shares in Improve Medical Instruments have risen appreciably however, its P/S is still subdued. 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.
It's no surprise that Improve Medical Instruments maintains its low P/S off the back of its sliding revenue over the medium-term. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. Given the current circumstances, it seems unlikely that the share price will experience any significant movement in either direction in the near future if recent medium-term revenue trends persist.
Before you take the next step, you should know about the 2 warning signs for Improve Medical Instruments (1 is concerning!) that we have uncovered.
Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.
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即使在價格大幅上漲之後,Improve Medical Instruments目前看來仍是一個強勁的買入機會,其市銷率(或 “市盈率”)爲2.5倍,因爲中國生命科學行業幾乎有一半的公司的市銷率大於5.9倍,即使市盈率高於9倍也並非不尋常。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。
2024 年 3 月 18 日,深圳證券交易所:300030 與行業的市銷比率
改善醫療器械最近的表現如何?
例如,假設改善醫療器械由於收入下降而最近財務表現不佳。也許市場認爲最近的收入表現不足以維持該行業的步伐,從而導致市銷率受到影響。那些看好Imvere Medical Instruments的人希望情況並非如此,這樣他們就可以以較低的估值買入該股。
想全面了解公司的收益、收入和現金流嗎?然後,我們關於改善醫療器械的免費報告將幫助您了解其歷史表現。
收入增長指標告訴我們低市銷率有哪些?
爲了證明其市銷率是合理的,Improve Medical Instruments需要實現大幅落後於該行業的疲軟增長。