V.S. International Group Limited (HKG:1002) shareholders won't be pleased to see that the share price has had a very rough month, dropping 28% and undoing the prior period's positive performance. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 13% in that time.
Although its price has dipped substantially, when almost half of the companies in Hong Kong's Machinery industry have price-to-sales ratios (or "P/S") below 0.7x, you may still consider V.S. International Group as a stock probably not worth researching with its 2x P/S ratio. However, the P/S might be high for a reason and it requires further investigation to determine if it's justified.
SEHK:1002 Price to Sales Ratio vs Industry August 6th 2024
How Has V.S. International Group Performed Recently?
The revenue growth achieved at V.S. International Group over the last year would be more than acceptable for most companies. Perhaps the market is expecting this decent revenue performance to beat out the industry over the near term, which has kept the P/S propped up. 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 V.S. International Group, 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?
In order to justify its P/S ratio, V.S. International Group would need to produce impressive growth in excess of the industry.
If we review the last year of revenue growth, the company posted a worthy increase of 7.9%. Still, lamentably revenue has fallen 80% 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 14% growth in the next 12 months, the company's downward momentum based on recent medium-term revenue results is a sobering picture.
In light of this, it's alarming that V.S. International Group's P/S sits above the majority of other companies. It seems most investors are ignoring the recent poor growth rate 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 Does V.S. International Group's P/S Mean For Investors?
There's still some elevation in V.S. International Group's P/S, even if the same can't be said for its share price recently. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.
We've established that V.S. International Group currently trades on a much higher than expected P/S since its recent revenues have been in decline over the medium-term. With a revenue decline on investors' minds, the likelihood of a souring sentiment is quite high which could send the P/S back in line with what we'd expect. Should recent medium-term revenue trends persist, it would pose a significant risk to existing shareholders' investments and prospective investors will have a hard time accepting the current value of the stock.
You always need to take note of risks, for example - V.S. International Group has 3 warning signs we think 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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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
V.S. International Group Limited (HKG:1002)的股東們將不會滿意看到股價經歷了非常艱難的一個月,下降了28%,從而取消了上一個時期的積極表現。在過去的30天裏,股價下跌了13%,爲股東度過了艱難的一年。
雖然V.S. International Group的價格已經大幅下跌,但當幾乎一半的香港機械行業公司的市銷率低於0.7倍時,你可能仍然認爲V.S. International Group的2倍市銷率不值得研究。但是,市銷率可能之所以高,需要進一步調查來判斷是否合理。
SEHK:1002市銷率與行業板塊的比較(2024年8月6日)
V.S. International Group最近的表現如何?
V.S. International Group在過去一年中實現的營收增長對於大多數公司來說都是可以接受的。也許市場預計這種不錯的營收表現將在近期超越行業,這使得市銷率保持在高位。然而,如果這不是事實,投資者可能會爲該股票支付過高價格而受到損失。
儘管沒有V.S. International Group的分析師預測數據,但可以查看這個免費的數據豐富的可視化工具來了解該公司在收益、營收和現金流方面的情況。
營業收入預測是否與高市銷率相匹配?
爲了證明其市銷率的合理性,V.S. International Group需要在業務增長方面表現出令人印象深刻的超常表現。