Despite an already strong run, Winning Tower Group Holdings Limited (HKG:8362) shares have been powering on, with a gain of 100% in the last thirty days. The annual gain comes to 225% following the latest surge, making investors sit up and take notice.
Since its price has surged higher, you could be forgiven for thinking Winning Tower Group Holdings is a stock not worth researching with a price-to-sales ratios (or "P/S") of 1.6x, considering almost half the companies in Hong Kong's Consumer Retailing industry have P/S ratios below 0.6x. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's as high as it is.
SEHK:8362 Price to Sales Ratio vs Industry March 11th 2024
What Does Winning Tower Group Holdings' Recent Performance Look Like?
For example, consider that Winning Tower Group Holdings' financial performance has been poor lately as its revenue has been in decline. Perhaps the market believes the company can do enough to outperform the rest of the industry in the near future, which is keeping the P/S ratio high. However, if this isn't the case, investors might get caught out paying too much for the stock.
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Winning Tower Group Holdings will help you shine a light on its historical performance.
Do Revenue Forecasts Match The High P/S Ratio?
There's an inherent assumption that a company should outperform the industry for P/S ratios like Winning Tower Group Holdings' to be considered reasonable.
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 17%. Unfortunately, that's brought it right back to where it started three years ago with revenue growth being virtually non-existent overall during that time. Therefore, it's fair to say that revenue growth has been inconsistent recently for the company.
In contrast to the company, the rest of the industry is expected to grow by 11% over the next year, which really puts the company's recent medium-term revenue decline into perspective.
With this in mind, we find it worrying that Winning Tower Group Holdings' P/S exceeds that of its industry peers. It seems most investors are ignoring the recent poor growth rate and are hoping for a turnaround in the company's business prospects. Only the boldest would assume these prices are sustainable as a continuation of recent revenue trends is likely to weigh heavily on the share price eventually.
The Bottom Line On Winning Tower Group Holdings' P/S
The large bounce in Winning Tower Group Holdings' shares has lifted the company's P/S handsomely. 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 Winning Tower Group Holdings currently trades on a much higher than expected P/S since its recent revenues have been in decline over the medium-term. Right now we aren't comfortable with the high P/S as this revenue performance is highly unlikely to support such positive sentiment for long. Unless the recent medium-term conditions improve markedly, investors will have a hard time accepting the share price as fair value.
You need to take note of risks, for example - Winning Tower Group Holdings has 3 warning signs (and 2 which are a bit unpleasant) we think you should know about.
It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).
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.
既に強い成長を見せているWinning Tower Group Holdings Limited(HKG:8362)の株式は、過去30日間で100%上昇し続けています。最新の急騰により、年間の成長率は225%に達し、投資家は注目するようになりました。
その株価が上昇したため、Winning Tower Group Holdingsが1.6倍のSales-to-Price Ratio(P/S)を持つ株式であると考えると、香港の消費小売業の約半数がP / S比率が0.6倍以下であることを考慮すると、調査に値しない株式のように思える可能性があります。ただし、P / Sをそのまま受け入れることは賢明ではなく、その比率が高い理由がある可能性があるためです。
SEHK:8362の価格対売上高比率と業界の比較 2024年3月11日
Winning Tower Group Holdingsの最近のパフォーマンスはどうですか?
たとえば、Winning Tower Group Holdingsの財務パフォーマンスが最近低迷しているため、売上高が減少しています。たぶん、市場は、今後、同社が業界全体よりも優れた成績を収めることができると信じており、これがP / S比率を高く保つ原因となっています。ただし、これが事実でない場合、投資家は株式に過剰な価格を支払いすぎてしまう可能性があります。
同社の売上高、収益、キャッシュフローに関する完全な情報を知りたい場合は、私たちの無料レポート「Winning Tower Group Holdingsの歴史的パフォーマンス」をご覧ください。
高いP / S比率と一致する売上高の予測はありますか?
Winning Tower Group HoldingsのようなP / S比率については、業界全体よりも優れた成績を収める必要があるという内在的な前提があります。
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。