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Dosilicon Co., Ltd.'s (SHSE:688110) Earnings Haven't Escaped The Attention Of Investors

Dosilicon株式会社(SHSE:688110)の収益は投資家の注目を逃れていません

Simply Wall St ·  2023/12/19 19:35

With a price-to-sales (or "P/S") ratio of 26.4x Dosilicon Co., Ltd. (SHSE:688110) may be sending very bearish signals at the moment, given that almost half of all the Semiconductor companies in China have P/S ratios under 7.7x and even P/S lower than 3x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.

View our latest analysis for Dosilicon

ps-multiple-vs-industry
SHSE:688110 Price to Sales Ratio vs Industry December 20th 2023

What Does Dosilicon's P/S Mean For Shareholders?

Dosilicon hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. One possibility is that the P/S ratio is high because investors think this poor revenue performance will turn the corner. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Dosilicon.

Is There Enough Revenue Growth Forecasted For Dosilicon?

In order to justify its P/S ratio, Dosilicon would need to produce outstanding growth that's well in excess of the industry.

Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 56%. As a result, revenue from three years ago have also fallen 27% overall. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

Turning to the outlook, the next year should generate growth of 49% as estimated by the sole analyst watching the company. Meanwhile, the rest of the industry is forecast to only expand by 41%, which is noticeably less attractive.

With this in mind, it's not hard to understand why Dosilicon's P/S is high relative to its industry peers. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Bottom Line On Dosilicon's P/S

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.

As we suspected, our examination of Dosilicon's analyst forecasts revealed that its superior revenue outlook is contributing to its high P/S. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. Unless these conditions change, they will continue to provide strong support to the share price.

Plus, you should also learn about this 1 warning sign we've spotted with Dosilicon.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

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.

これらの内容は、情報提供及び投資家教育のためのものであり、いかなる個別株や投資方法を推奨するものではありません。 更に詳しい情報
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