Unfortunately for some shareholders, the Jiading International Group Holdings Ltd (HKG:8153) share price has dived 27% in the last thirty days, prolonging recent pain.    The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 85% loss during that time.  

Although its price has dipped substantially, you could still be forgiven for feeling indifferent about Jiading International Group Holdings' P/S ratio of 0.4x, since the median price-to-sales (or "P/S") ratio for the Media industry in Hong Kong is also close to 0.6x.  While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.    

SEHK:8153 Price to Sales Ratio vs Industry February 27th 2024

How Jiading International Group Holdings Has Been Performing

Jiading International Group Holdings certainly has been doing a great job lately as it's been growing its revenue at a really rapid pace.   It might be that many expect the strong revenue performance to wane, which has kept the share price, and thus the P/S ratio, from rising.  If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.    

Although there are no analyst estimates available for Jiading International Group Holdings, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.  

How Is Jiading International Group Holdings' Revenue Growth Trending?  

The only time you'd be comfortable seeing a P/S like Jiading International Group Holdings' is when the company's growth is tracking the industry closely.  

Taking a look back first, we see that the company grew revenue by an impressive 48% last year.    Spectacularly, three year revenue growth has ballooned by several orders of magnitude, thanks in part to the last 12 months of revenue growth.  Accordingly, shareholders would have been over the moon with those medium-term rates of revenue growth.  

Comparing that recent medium-term revenue trajectory with the industry's one-year growth forecast of 11% shows it's noticeably more attractive.

With this information, we find it interesting that Jiading International Group Holdings is trading at a fairly similar P/S compared to the industry.  Apparently some shareholders believe the recent performance is at its limits and have been accepting lower selling prices.  

The Bottom Line On Jiading International Group Holdings' P/S

Jiading International Group Holdings' plummeting stock price has brought its P/S back to a similar region as the rest of the industry.      Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

To our surprise, Jiading International Group Holdings revealed its three-year revenue trends aren't contributing to its P/S as much as we would have predicted, given they look better than current industry expectations.  There could be some unobserved threats to revenue preventing the P/S ratio from matching this positive performance.  It appears some are indeed anticipating revenue instability, because the persistence of these recent medium-term conditions would normally provide a boost to the share price.    

We don't want to rain on the parade too much, but we did also find 5 warning signs for Jiading International Group Holdings (4 shouldn't be ignored!) that you need to be mindful of.  

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.

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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.