Greatime International Holdings Limited (HKG:844) shares have had a really impressive month, gaining 50% after a shaky period beforehand. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 26% over that time.
Even after such a large jump in price, it's still not a stretch to say that Greatime International Holdings' price-to-sales (or "P/S") ratio of 0.4x right now seems quite "middle-of-the-road" compared to the Luxury industry in Hong Kong, where the median P/S ratio is around 0.7x. 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 Has Greatime International Holdings Performed Recently?
Revenue has risen firmly for Greatime International Holdings recently, which is pleasing to see. It might be that many expect the respectable revenue performance to wane, which has kept the P/S from rising. Those who are bullish on Greatime International Holdings 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 Greatime International Holdings, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
How Is Greatime International Holdings' Revenue Growth Trending?
There's an inherent assumption that a company should be matching the industry for P/S ratios like Greatime International Holdings' to be considered reasonable.
Taking a look back first, we see that the company managed to grow revenues by a handy 8.4% last year. The solid recent performance means it was also able to grow revenue by 22% in total over the last three years. Accordingly, shareholders would have probably been satisfied with the medium-term rates of revenue growth.
This is in contrast to the rest of the industry, which is expected to grow by 13% over the next year, materially higher than the company's recent medium-term annualised growth rates.
With this information, we find it interesting that Greatime International Holdings is trading at a fairly similar P/S compared to the industry. It seems most investors are ignoring the fairly limited recent growth rates and are willing to pay up for exposure to the stock. They may be setting themselves up for future disappointment if the P/S falls to levels more in line with recent growth rates.
The Bottom Line On Greatime International Holdings' P/S
Its shares have lifted substantially and now Greatime International Holdings' P/S is back within range of the industry median. 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.
Our examination of Greatime International Holdings revealed its poor three-year revenue trends aren't resulting in a lower P/S as per our expectations, given they look worse than current industry outlook. When we see weak revenue with slower than industry growth, we suspect the share price is at risk of declining, bringing the P/S back in line with expectations. If recent medium-term revenue trends continue, the probability of a share price decline will become quite substantial, placing shareholders at risk.
It's always necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Greatime International Holdings (at least 1 which is significant), and understanding these should be part of your investment process.
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.
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.
Greatime International Holdings集團有限公司(HKG:844)股票在過去一個月表現非常出色,經歷了動盪期之後上漲了50%。但是,遺憾的是,過去一年的虧損仍然使股票下跌了26%。
即使在股價出現如此大幅上漲之後,現在Greatime International Holdings的市銷率(或稱“P/S比率”)爲0.4x,與香港奢侈品行業中位數的P/S比率約爲0.7x相比,仍然顯得相當“平庸”。雖然這可能不會引起任何人的關注,但如果P/S比率不被證明是合理的,投資者可能會錯過一個潛在的機會或忽視即將到來的失望。
Greatime International Holdings最近的表現如何?
Greatime International Holdings的營業收入最近有所上漲,這是令人高興的。可能許多人認爲,受到尊敬的營收表現會逐漸減弱,這使得市銷率沒有上升。看好Greatime International Holdings的人將希望情況不是這樣,以便他們可以以較低的估值買入該股。
儘管Greatime International Holdings沒有分析師估值,但可以查看這個免費數據豐富的可視化來了解公司在盈利、營收和現金流方面的表現。
Greatime International Holdings的營收增長如何?
有一個固有的假設,即像Greatime International Holdings這樣的公司應該與行業的市銷率比率相匹配,才能被視爲合理。
在這種情況下,發現Greatime International Holdings的市銷率與行業的市銷率相當類似是有趣的。看來大多數投資者忽略了最近增長率相對有限的情況,願意爲接觸該股付出高昂代價。如果市銷率下降到與最近增長率更接近的水平,則可能會引發未來失望的風險。
關於Greatime International Holdings的市銷率,總的來說,隨着股票價格的大幅上漲,Greatime International Holdings的市銷率已經回到了行業中位數的範圍內。僅使用市銷率來判斷是否應該賣出你的股票是不明智的,但它可以成爲公司未來前景的實用指南。
我們對Greatime International Holdings的調查顯示,三年來其營收趨勢不佳,但並未如我們所預期的那樣導致市銷率下降,考慮到它們比行業現狀更糟糕。當我們看到營收疲軟且增長低於行業水平時,我們懷疑股價有下降的風險,將市銷率帶回到預期的水平。如果最近的中期營收趨勢持續下去,股價下跌的可能性將變得相當大,使股東們處於風險之中。
考慮到投資風險的存在,需要謹慎對待。我們在Greatime International Holdings發現了2個警示信號(至少有1個是重要的),了解這些信號應該是你投資過程的一部分。
始終需要考慮投資風險的存在。我們已經識別了Greatime International Holdings的2個警告信號(至少有1個是重要的),理解這些應該是你投資過程的一部分。