BlueFocus Intelligent Communications Group Co., Ltd. (SZSE:300058) shareholders have had their patience rewarded with a 32% share price jump in the last month. But the gains over the last month weren't enough to make shareholders whole, as the share price is still down 9.4% in the last twelve months.

Even after such a large jump in price, BlueFocus Intelligent Communications Group's price-to-sales (or "P/S") ratio of 0.3x might still make it look like a strong buy right now compared to the wider Media industry in China, where around half of the companies have P/S ratios above 2.4x and even P/S above 6x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly reduced P/S.

How Has BlueFocus Intelligent Communications Group Performed Recently?

Recent times have been advantageous for BlueFocus Intelligent Communications Group as its revenues have been rising faster than most other companies. One possibility is that the P/S ratio is low because investors think this strong revenue performance might be less impressive moving forward. If the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.

Is There Any Revenue Growth Forecasted For BlueFocus Intelligent Communications Group?

There's an inherent assumption that a company should far underperform the industry for P/S ratios like BlueFocus Intelligent Communications Group's to be considered reasonable.

Retrospectively, the last year delivered an exceptional 47% gain to the company's top line. Pleasingly, revenue has also lifted 36% in aggregate from three years ago, thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing revenue over that time.

Looking ahead now, revenue is anticipated to climb by 8.8% during the coming year according to the five analysts following the company. Meanwhile, the rest of the industry is forecast to expand by 13%, which is noticeably more attractive.

In light of this, it's understandable that BlueFocus Intelligent Communications Group's P/S sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

The Bottom Line On BlueFocus Intelligent Communications Group's P/S

Even after such a strong price move, BlueFocus Intelligent Communications Group'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.

We've established that BlueFocus Intelligent Communications Group maintains its low P/S on the weakness of its forecast growth being lower than the wider industry, as expected. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. It's hard to see the share price rising strongly in the near future under these circumstances.

A lot of potential risks can sit within a company's balance sheet. You can assess many of the main risks through our free balance sheet analysis for BlueFocus Intelligent Communications Group with six simple checks.

If you're unsure about the strength of BlueFocus Intelligent Communications Group's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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