Those holding Min Fu International Holding Limited (HKG:8511) shares would be relieved that the share price has rebounded 26% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. But the last month did very little to improve the 72% share price decline over the last year.
In spite of the firm bounce in price, you could still be forgiven for feeling indifferent about Min Fu International Holding's P/S ratio of 0.3x, since the median price-to-sales (or "P/S") ratio for the Electronic industry in Hong Kong is also close to 0.4x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.
SEHK:8511 Price to Sales Ratio vs Industry July 7th 2024
What Does Min Fu International Holding's P/S Mean For Shareholders?
Min Fu International Holding certainly has been doing a great job lately as it's been growing its revenue at a really rapid pace. Perhaps the market is expecting future revenue performance to taper off, which has kept the P/S from rising. If that doesn't eventuate, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Min Fu International Holding will help you shine a light on its historical performance.
How Is Min Fu International Holding's Revenue Growth Trending?
There's an inherent assumption that a company should be matching the industry for P/S ratios like Min Fu International Holding's to be considered reasonable.
Retrospectively, the last year delivered an exceptional 152% gain to the company's top line. The strong recent performance means it was also able to grow revenue by 101% in total over the last three years. So we can start by confirming that the company has done a great job of growing revenue over that time.
Comparing that recent medium-term revenue trajectory with the industry's one-year growth forecast of 20% shows it's noticeably more attractive.
With this information, we find it interesting that Min Fu International Holding is trading at a fairly similar P/S compared to the industry. It may be that most investors are not convinced the company can maintain its recent growth rates.
The Final Word
Its shares have lifted substantially and now Min Fu International Holding's 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.
We've established that Min Fu International Holding currently trades on a lower than expected P/S since its recent three-year growth is higher than the wider industry forecast. When we see strong revenue with faster-than-industry growth, we can only assume potential risks are what might be placing pressure on the P/S ratio. At least the risk of a price drop looks to be subdued if recent medium-term revenue trends continue, but investors seem to think future revenue could see some volatility.
Don't forget that there may be other risks. For instance, we've identified 4 warning signs for Min Fu International Holding (2 don't sit too well with us) you should be aware of.
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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根據這些信息,我們發現Min Fu International Holding的市銷率與行業相比相當相似。可能是大多數投資者並不認爲這家公司能夠保持其最近的增長率。
最終結論
雖然單憑市銷率來確定是否出售股票並不明智,但市銷率可以作爲公司未來前景的實用指南。
我們已經確定,由於其最近三年的增長高於更廣泛行業的預測,Min Fu International Holding目前的市銷率低於預期。當我們看到強勁的營收和比行業增長更快的增長時,唯一能想到的潛在風險就是可能對市銷率施加壓力。至少,如果最近中期的營收趨勢繼續,價格下跌的風險似乎會受到壓制,但投資者似乎認爲未來的營收可能會出現一些波動。
不要忘記還可能存在其他風險。例如,我們已經確定了4個Min Fu International Holding的警示信號(其中2個對我們來說不太合適),你應該注意。