To the annoyance of some shareholders, Zhejiang Jiaao Enprotech Stock Co., Ltd (SHSE:603822) shares are down a considerable 27% in the last month, which continues a horrid run for the company. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 46% in that time.

Following the heavy fall in price, Zhejiang Jiaao Enprotech Stock may be sending buy signals at present with its price-to-sales (or "P/S") ratio of 0.5x, considering almost half of all companies in the Chemicals industry in China have P/S ratios greater than 2x and even P/S higher than 4x aren't out of the ordinary. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

What Does Zhejiang Jiaao Enprotech Stock's Recent Performance Look Like?

Revenue has risen at a steady rate over the last year for Zhejiang Jiaao Enprotech Stock, which is generally not a bad outcome. Perhaps the market believes the recent revenue performance might fall short of industry figures in the near future, leading to a reduced P/S. Those who are bullish on Zhejiang Jiaao Enprotech Stock will be hoping that this isn't the case, so that they can pick up the stock at a lower valuation.

How Is Zhejiang Jiaao Enprotech Stock's Revenue Growth Trending?

In order to justify its P/S ratio, Zhejiang Jiaao Enprotech Stock would need to produce sluggish growth that's trailing the industry.

Taking a look back first, we see that the company managed to grow revenues by a handy 2.7% last year. This was backed up an excellent period prior to see revenue up by 186% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

When compared to the industry's one-year growth forecast of 27%, the most recent medium-term revenue trajectory is noticeably more alluring

With this information, we find it odd that Zhejiang Jiaao Enprotech Stock is trading at a P/S lower than the industry. It looks like most investors are not convinced the company can maintain its recent growth rates.

What Does Zhejiang Jiaao Enprotech Stock's P/S Mean For Investors?

The southerly movements of Zhejiang Jiaao Enprotech Stock's shares means its P/S is now sitting at a pretty low level. 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.

We're very surprised to see Zhejiang Jiaao Enprotech Stock currently trading on a much lower than expected P/S since its recent three-year growth is higher than the wider industry forecast. When we see robust revenue growth that outpaces the industry, we presume that there are notable underlying risks to the company's future performance, which is exerting downward pressure on the P/S ratio. It appears many are indeed anticipating revenue instability, because the persistence of these recent medium-term conditions would normally provide a boost to the share price.

There are also other vital risk factors to consider before investing and we've discovered 2 warning signs for Zhejiang Jiaao Enprotech Stock that you should be aware of.

If these risks are making you reconsider your opinion on Zhejiang Jiaao Enprotech Stock, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.