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Even With A 27% Surge, Cautious Investors Are Not Rewarding Piesat Information Technology Co., Ltd.'s (SHSE:688066) Performance Completely

Even With A 27% Surge, Cautious Investors Are Not Rewarding Piesat Information Technology Co., Ltd.'s (SHSE:688066) Performance Completely

儘管股價暴漲27%,謹慎的投資者並未完全獎勵航天宏圖信息技術股份有限公司(SHSE:688066)的表現
Simply Wall St ·  11/05 19:42

Piesat Information Technology Co., Ltd. (SHSE:688066) shares have continued their recent momentum with a 27% gain in the last month alone. But the last month did very little to improve the 51% share price decline over the last year.

Although its price has surged higher, Piesat Information Technology may still be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 3.8x, since almost half of all companies in the Software industry in China have P/S ratios greater than 6.6x and even P/S higher than 12x are not unusual. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

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SHSE:688066 Price to Sales Ratio vs Industry November 6th 2024

How Has Piesat Information Technology Performed Recently?

Piesat Information Technology could be doing better as its revenue has been going backwards lately while most other companies have been seeing positive revenue growth. The P/S ratio is probably low because investors think this poor revenue performance isn't going to get any better. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

Want the full picture on analyst estimates for the company? Then our free report on Piesat Information Technology will help you uncover what's on the horizon.

What Are Revenue Growth Metrics Telling Us About The Low P/S?

In order to justify its P/S ratio, Piesat Information Technology would need to produce sluggish growth that's trailing the industry.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 41%. That put a dampener on the good run it was having over the longer-term as its three-year revenue growth is still a noteworthy 26% in total. Accordingly, while they would have preferred to keep the run going, shareholders would be roughly satisfied with the medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 78% during the coming year according to the four analysts following the company. With the industry only predicted to deliver 33%, the company is positioned for a stronger revenue result.

In light of this, it's peculiar that Piesat Information Technology's P/S sits below the majority of other companies. It looks like most investors are not convinced at all that the company can achieve future growth expectations.

The Final Word

Despite Piesat Information Technology's share price climbing recently, its P/S still lags most other companies. 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.

A look at Piesat Information Technology's revenues reveals that, despite glowing future growth forecasts, its P/S is much lower than we'd expect. The reason for this depressed P/S could potentially be found in the risks the market is pricing in. At least price risks look to be very low, but investors seem to think future revenues could see a lot of volatility.

There are also other vital risk factors to consider before investing and we've discovered 2 warning signs for Piesat Information Technology that you should be aware of.

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.

声明:本內容僅用作提供資訊及教育之目的,不構成對任何特定投資或投資策略的推薦或認可。 更多信息
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