Be Friends Holding Limited's (HKG:1450) price-to-sales (or "P/S") ratio of 2.8x may look like a poor investment opportunity when you consider close to half the companies in the Media industry in Hong Kong have P/S ratios below 0.7x. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.
See our latest analysis for Be Friends Holding
What Does Be Friends Holding's Recent Performance Look Like?
Be Friends Holding certainly has been doing a great job lately as it's been growing its revenue at a really rapid pace. The P/S ratio is probably high because investors think this strong revenue growth will be enough to outperform the broader industry in the near future. If not, then existing shareholders might be a little nervous about the viability of the share price.
Although there are no analyst estimates available for Be Friends Holding, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
What Are Revenue Growth Metrics Telling Us About The High P/S?
There's an inherent assumption that a company should far outperform the industry for P/S ratios like Be Friends Holding's to be considered reasonable.
If we review the last year of revenue growth, the company posted a terrific increase of 215%. Spectacularly, three year revenue growth has ballooned by several orders of magnitude, thanks in part to the last 12 months of revenue growth. So we can start by confirming that the company has done a tremendous 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 can see why Be Friends Holding is trading at such a high P/S compared to the industry. It seems most investors are expecting this strong growth to continue and are willing to pay more for the stock.
The Bottom Line On Be Friends Holding's P/S
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.
As we suspected, our examination of Be Friends Holding revealed its three-year revenue trends are contributing to its high P/S, given they look better than current industry expectations. In the eyes of shareholders, the probability of a continued growth trajectory is great enough to prevent the P/S from pulling back. If recent medium-term revenue trends continue, it's hard to see the share price falling strongly in the near future under these circumstances.
It is also worth noting that we have found 2 warning signs for Be Friends Holding that you need to take into consideration.
If these risks are making you reconsider your opinion on Be Friends Holding, explore our interactive list of high quality stocks to get an idea of what else is out there.
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.
Be Friends Holding Limited社の(HKG:1450)のP/S比率は2.8倍であり、香港のメディア業界の半数近くがP/S比率0.7倍以下であることを考えると、投資機会は乏しいと見られます。それでも、P/S比率が非常に高い根拠が合理的であるかどうかを少し掘り下げる必要があります。
Be Friends Holdingの最新分析をご覧ください。
ビーフレンズ・ホールディングスの最近のパフォーマンスはどのようになっていますか?
Be Friends Holdingは最近、収益成長が非常に速く、幅広い業界を上回るのに十分な強い収益成長があると投資家が考えるため、P/S比率が高いかもしれません。もしそうでなければ、株価の持続可能性を心配する既存株主が少し神経質になるかもしれません。
Be Friends Holdingのアナリスト予想はありませんが、この点については調べてみてください。無料収益、売上高、キャッシュフローについて企業がどのように並ぶかを見るための豊富なデータの可視化。
高P/Sについて収益成長メトリックスは何を示していますか?
Be Friends HoldingのようなP/S比率を合理的と考えるには、会社が業界をはるかに上回る必要があるという前提があります。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。