Unfortunately for some shareholders, the Future FinTech Group Inc. (NASDAQ:FTFT) share price has dived 29% in the last thirty days, prolonging recent pain.    The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 65% loss during that time.  

After such a large drop in price, Future FinTech Group may be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 0.5x, since almost half of all companies in the Diversified Financial industry in the United States have P/S ratios greater than 2.1x and even P/S higher than 5x are not unusual.   However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.  

See our latest analysis for Future FinTech Group

NasdaqCM:FTFT Price to Sales Ratio vs Industry November 14th 2023

What Does Future FinTech Group's Recent Performance Look Like?

As an illustration, revenue has deteriorated at Future FinTech Group over the last year, which is not ideal at all.   Perhaps the market believes the recent revenue performance isn't good enough to keep up the industry, causing the P/S ratio to suffer.  However, if this doesn't eventuate then existing shareholders may be feeling optimistic about the future direction of the share price.    

We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Future FinTech Group's earnings, revenue and cash flow.  

How Is Future FinTech Group's Revenue Growth Trending?  

In order to justify its P/S ratio, Future FinTech Group would need to produce sluggish growth that's trailing 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 42%.   The latest three year period has seen an incredible overall rise in revenue, a stark contrast to the last 12 months.  Accordingly, shareholders will be pleased, but also have some serious questions to ponder about the last 12 months.  

This is in contrast to the rest of the industry, which is expected to grow by 5.9% over the next year, materially lower than the company's recent medium-term annualised growth rates.

With this in mind, we find it intriguing that Future FinTech Group's P/S isn't as high compared to that of its industry peers.  Apparently some shareholders believe the recent performance has exceeded its limits and have been accepting significantly lower selling prices.  

What We Can Learn From Future FinTech Group's P/S?

Future FinTech Group's P/S has taken a dip along with its share price.      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.

We're very surprised to see Future FinTech Group 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.    

It's always necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Future FinTech Group, and understanding these should be part of your investment process.  

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.

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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.