Biosino Bio-Technology and Science Incorporation (HKG:8247) shareholders would be excited to see that the share price has had a great month, posting a 68% gain and recovering from prior weakness. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 17% over that time.
Although its price has surged higher, Biosino Bio-Technology and Science Incorporation may still look like a strong buying opportunity at present with its price-to-sales (or "P/S") ratio of 0.4x, considering almost half of all companies in the Biotechs industry in Hong Kong have P/S ratios greater than 11.8x and even P/S higher than 26x aren't out of the ordinary. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so limited.
SEHK:8247 Price to Sales Ratio vs Industry April 26th 2024
What Does Biosino Bio-Technology and Science Incorporation's Recent Performance Look Like?
For instance, Biosino Bio-Technology and Science Incorporation's receding revenue in recent times would have to be some food for thought. 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 Biosino Bio-Technology and Science Incorporation 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 Biosino Bio-Technology and Science Incorporation will help you shine a light on its historical performance.
How Is Biosino Bio-Technology and Science Incorporation's Revenue Growth Trending?
The only time you'd be truly comfortable seeing a P/S as depressed as Biosino Bio-Technology and Science Incorporation's is when the company's growth is on track to lag the industry decidedly.
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%. This means it has also seen a slide in revenue over the longer-term as revenue is down 11% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.
In contrast to the company, the rest of the industry is expected to grow by 41% over the next year, which really puts the company's recent medium-term revenue decline into perspective.
In light of this, it's understandable that Biosino Bio-Technology and Science Incorporation's P/S would sit below the majority of other companies. However, we think shrinking revenues are unlikely to lead to a stable P/S over the longer term, which could set up shareholders for future disappointment. There's potential for the P/S to fall to even lower levels if the company doesn't improve its top-line growth.
The Final Word
Even after such a strong price move, Biosino Bio-Technology and Science Incorporation's P/S still trails the rest of the industry. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.
Our examination of Biosino Bio-Technology and Science Incorporation confirms that the company's shrinking revenue over the past medium-term is a key factor in its low price-to-sales ratio, given the industry is projected to grow. 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 Biosino Bio-Technology and Science Incorporation (1 can't be ignored!) that we have uncovered.
If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).
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例如,Biosino Bio-Technology and Science Incorporation最近收入的下降值得深思。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Biosino Bio-Technology and Science Incorporation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。
我們對Biosino Bio-Technology and Science Incorporation的審查證實,鑑於該行業預計將增長,該公司在過去的中期收入萎縮是其低市銷率的關鍵因素。在現階段,投資者認爲,收入改善的可能性不足以證明更高的市銷率是合理的。鑑於目前的情況,如果最近的中期收入趨勢持續下去,股價似乎不太可能在不久的將來雙向出現任何重大波動。