Whole Shine Medical Technology Co., Ltd. (SZSE:002622) shareholders that were waiting for something to happen have been dealt a blow with a 28% share price drop in the last month. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 38% in that time.
Although its price has dipped substantially, given close to half the companies operating in China's Healthcare industry have price-to-sales ratios (or "P/S") below 1.8x, you may still consider Whole Shine Medical Technology as a stock to potentially avoid with its 3.3x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the elevated P/S.
SZSE:002622 Price to Sales Ratio vs Industry February 1st 2024
How Whole Shine Medical Technology Has Been Performing
Whole Shine Medical Technology has been doing a good job lately as it's been growing revenue at a solid pace. Perhaps the market is expecting this decent revenue performance to beat out the industry over the near term, which has kept the P/S propped up. However, if this isn't the case, investors might get caught out paying too much for the stock.
Although there are no analyst estimates available for Whole Shine Medical Technology, 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?
In order to justify its P/S ratio, Whole Shine Medical Technology would need to produce impressive growth in excess of the industry.
If we review the last year of revenue growth, the company posted a terrific increase of 22%. The latest three year period has also seen an incredible overall rise in revenue, aided by its incredible short-term performance. Accordingly, shareholders would have been over the moon with those medium-term rates of revenue growth.
Comparing that to the industry, which is only predicted to deliver 19% growth in the next 12 months, the company's momentum is stronger based on recent medium-term annualised revenue results.
In light of this, it's understandable that Whole Shine Medical Technology's P/S sits above the majority of other companies. Presumably shareholders aren't keen to offload something they believe will continue to outmanoeuvre the wider industry.
What Does Whole Shine Medical Technology's P/S Mean For Investors?
Whole Shine Medical Technology's P/S remain high even after its stock plunged. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.
As we suspected, our examination of Whole Shine Medical Technology revealed its three-year revenue trends are contributing to its high P/S, given they look better than current industry expectations. At this stage investors feel the potential continued revenue growth in the future is great enough to warrant an inflated P/S. If recent medium-term revenue trends continue, it's hard to see the share price falling strongly in the near future under these circumstances.
Before you take the next step, you should know about the 1 warning sign for Whole Shine Medical Technology that we have uncovered.
If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).
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有鑑於此,Whole Shine Medical Technology的市銷率高於其他多數公司是可以理解的。據推測,股東們並不熱衷於轉移他們認爲將繼續超越整個行業的東西。
Whole Shine Medical Technology的市銷率對投資者意味着什麼?
即使在股票暴跌之後,Whole Shine Medical Technology的市銷率仍然很高。我們可以說,市銷比率的力量主要不是作爲一種估值工具,而是用來衡量當前的投資者情緒和未來預期。
正如我們所懷疑的那樣,我們對Whole Shine Medical Technology的檢查顯示,其三年的收入趨勢是其高市銷率的原因,因爲這些趨勢看起來好於當前的行業預期。在現階段,投資者認爲,未來潛在的持續收入增長足以保證市銷率的上升。如果最近的中期收入趨勢持續下去,在這種情況下,很難看到股價在不久的將來強勁下跌。
在你採取下一步行動之前,你應該了解我們發現的Whole Shine Medical Technology的1個警告信號。