Unfortunately for some shareholders, the Tinavi Medical Technologies Co.,Ltd. (SHSE:688277) share price has dived 26% in the last thirty days, prolonging recent pain. For any long-term shareholders, the last month ends a year to forget by locking in a 55% share price decline.
Even after such a large drop in price, given around half the companies in China's Medical Equipment industry have price-to-sales ratios (or "P/S") below 5.8x, you may still consider Tinavi Medical TechnologiesLtd as a stock to avoid entirely with its 16.4x P/S ratio. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.
SHSE:688277 Price to Sales Ratio vs Industry April 17th 2024
What Does Tinavi Medical TechnologiesLtd's Recent Performance Look Like?
With revenue growth that's exceedingly strong of late, Tinavi Medical TechnologiesLtd has been doing very well. The P/S ratio is probably high because investors think this strong revenue growth will be enough to outperform the broader industry in the near future. However, if this isn't the case, investors might get caught out paying too much for the stock.
Although there are no analyst estimates available for Tinavi Medical TechnologiesLtd, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
Do Revenue Forecasts Match The High P/S Ratio?
The only time you'd be truly comfortable seeing a P/S as steep as Tinavi Medical TechnologiesLtd's is when the company's growth is on track to outshine the industry decidedly.
Taking a look back first, we see that the company grew revenue by an impressive 34% last year. The strong recent performance means it was also able to grow revenue by 54% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.
This is in contrast to the rest of the industry, which is expected to grow by 23% over the next year, materially higher than the company's recent medium-term annualised growth rates.
With this information, we find it concerning that Tinavi Medical TechnologiesLtd is trading at a P/S higher than the industry. It seems most investors are ignoring the fairly limited recent growth rates and are hoping for a turnaround in the company's business prospects. 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 Tinavi Medical TechnologiesLtd's P/S?
Even after such a strong price drop, Tinavi Medical TechnologiesLtd's P/S still exceeds the industry median significantly. 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.
The fact that Tinavi Medical TechnologiesLtd currently trades on a higher P/S relative to the industry is an oddity, since its recent three-year growth is lower than the wider industry forecast. 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. Unless there is a significant improvement in the company's medium-term performance, it will be difficult to prevent the P/S ratio from declining to a more reasonable level.
Having said that, be aware Tinavi Medical TechnologiesLtd is showing 1 warning sign in our investment analysis, you should know about.
If these risks are making you reconsider your opinion on Tinavi Medical TechnologiesLtd, explore our interactive list of high quality stocks to get an idea of what else is out there.
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根據這些信息,我們發現Tinavi Medical TechnologiesLtd的交易市銷率高於該行業。看來大多數投資者都忽視了近期相當有限的增長率,並希望公司的業務前景有所好轉。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 Tinavi Medical TechnologiesLtd 的市銷率中學到什麼?
即使價格下跌如此強勁,Tinavi Medical TechnologiesLtd的市銷率仍大大超過行業中位數。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。
相對於該行業,Tinavi Medical TechnologiesLtd目前的市銷率更高,這一事實很奇怪,因爲其最近三年的增長低於整個行業的預期。當我們觀察到收入增長慢於行業且市銷率高時,我們假設存在股價下跌的巨大風險,這將導致市銷率降低。除非公司的中期業績有顯著改善,否則很難防止市銷率下降到更合理的水平。
話雖如此,請注意,你應該知道Tinavi Medical TechnologiesLtd在我們的投資分析中顯示了一個警告信號。
如果這些風險讓你重新考慮你對Tinavi Medical TechnologiesLtd的看法,請瀏覽我們的高質量股票互動清單,了解還有什麼。