Bonny International Holding Limited (HKG:1906) shareholders won't be pleased to see that the share price has had a very rough month, dropping 34% and undoing the prior period's positive performance. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 36% share price drop.
Even after such a large drop in price, given close to half the companies operating in Hong Kong's Luxury industry have price-to-sales ratios (or "P/S") below 0.7x, you may still consider Bonny International Holding as a stock to potentially avoid with its 1.8x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the elevated P/S.
What Does Bonny International Holding's Recent Performance Look Like?
The revenue growth achieved at Bonny International Holding over the last year would be more than acceptable for most companies. It might be that many expect the respectable revenue performance to beat most other companies over the coming period, which has increased investors' willingness to pay up for the stock. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Bonny International Holding will help you shine a light on its historical performance.
Do Revenue Forecasts Match The High P/S Ratio?
In order to justify its P/S ratio, Bonny International Holding would need to produce impressive growth in excess of the industry.
Taking a look back first, we see that the company managed to grow revenues by a handy 10% last year. Still, lamentably revenue has fallen 38% in aggregate from three years ago, which is disappointing. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.
Comparing that to the industry, which is predicted to deliver 12% growth in the next 12 months, the company's downward momentum based on recent medium-term revenue results is a sobering picture.
With this information, we find it concerning that Bonny International Holding is trading at a P/S higher than the industry. It seems most investors are ignoring the recent poor growth rate and are hoping for a turnaround in the company's business prospects. There's a very good chance existing shareholders are setting themselves up for future disappointment if the P/S falls to levels more in line with the recent negative growth rates.
What Does Bonny International Holding's P/S Mean For Investors?
Despite the recent share price weakness, Bonny International Holding's P/S remains higher than most other companies in the industry. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.
Our examination of Bonny International Holding revealed its shrinking revenue over the medium-term isn't resulting in a P/S as low as we expected, given the industry is set to grow. When we see revenue heading backwards and underperforming the industry forecasts, we feel the possibility of the share price declining is very real, bringing the P/S back into the realm of reasonability. Unless the recent medium-term conditions improve markedly, investors will have a hard time accepting the share price as fair value.
Before you take the next step, you should know about the 3 warning signs for Bonny International Holding (1 is significant!) that we have uncovered.
It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
Bonny International Holding Limited (HKG:1906) 的股東們看到股價在過去的一個月裏大幅下跌34%,回撤了上一時期的積極表現,一定會感到不滿意。在過去的十二個月中已經持有股票的股東現在坐擁36%的股價下跌,而不是獲得獎勵。
即使股價下跌如此之多,事實上香港近一半的奢侈品公司的市銷率 (或"P/S") 低於0.7倍,因此您可能仍然要考慮避開Bonny International Holding,因其1.8倍的市銷率。儘管如此,我們需要深入挖掘才能確定這種高市銷率背後的理性基礎。
Bonny International Holding的最近表現如何?
Bonny International Holding在過去一年實現的營業收入增長對於大多數公司來說已經足夠可接受。許多人可能期望可觀的營收表現將在未來一段時期內超過大多數其他公司,這增加了投資者爲該股票支付高價格的意願。您真的希望如此,否則您就白白花費了一大筆錢。
您需要了解該公司的盈利、營收和現金流等情況嗎?我們的Bonny International Holding免費報告將幫助您快速了解其歷史業績。
營業收入預測是否與高市銷率相匹配?
爲了證明其高市銷率,Bonny International Holding需要實現超過該行業的驚人增長。
根據這些信息,我們發現Bonny International Holding以高於行業的市銷率交易是令人擔憂的。似乎大多數投資者忽視了最近的低增長率,並希望公司未來業務前景能夠好轉。如果市銷率下降至與最近的負增長率相符合的水平,現有的股東可能會自己給自己帶來未來的失望。
Bonny International Holding的市銷率對投資者意味着什麼?
儘管股價最近疲軟,但Bonny International Holding的市銷率仍高於行業中的大多數其他公司。雖然市銷率被認爲是某些行業內價值衡量的一種劣質方法,但它可以是一個強有力的商業情維指標。
我們對Bonny International Holding的調查顯示,考慮到該行業的增長預測,其營業收入在中期內的萎縮並沒有導致其市銷率降至我們預計的水平。當我們看到收入倒退並表現不佳時,我們認爲股價下跌的可能性是非常真實的,從而使市銷率回到合理的範疇。除非最近的中期狀況有明顯改善,否則投資者將難以認爲股價是合理的價值。
在您邁出下一步之前,您應該知道我們揭示的Bonny International Holding的3個警示信號(其中1個很重要!)。