Dragon King Group Holdings Limited (HKG:8493) shares have had a really impressive month, gaining 67% after a shaky period beforehand. This latest share price bounce rounds out a remarkable 350% gain over the last twelve months.
In spite of the firm bounce in price, you could still be forgiven for feeling indifferent about Dragon King Group Holdings' P/S ratio of 0.5x, since the median price-to-sales (or "P/S") ratio for the Hospitality industry in Hong Kong is also close to 0.8x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.
SEHK:8493 Price to Sales Ratio vs Industry June 26th 2024
How Dragon King Group Holdings Has Been Performing
Recent times have been quite advantageous for Dragon King Group Holdings as its revenue has been rising very briskly. Perhaps the market is expecting future revenue performance to taper off, which has kept the P/S from rising. If that doesn't eventuate, then existing shareholders have reason to 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 Dragon King Group Holdings' earnings, revenue and cash flow.
What Are Revenue Growth Metrics Telling Us About The P/S?
In order to justify its P/S ratio, Dragon King Group Holdings would need to produce growth that's similar to the industry.
If we review the last year of revenue growth, the company posted a terrific increase of 31%. However, this wasn't enough as the latest three year period has seen the company endure a nasty 47% drop in revenue in aggregate. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.
Weighing that medium-term revenue trajectory against the broader industry's one-year forecast for expansion of 19% shows it's an unpleasant look.
With this information, we find it concerning that Dragon King Group Holdings is trading at a fairly similar P/S compared to the industry. It seems most investors are ignoring the recent poor growth rate and are hoping for a turnaround in the company's business prospects. There's a good chance existing shareholders are setting themselves up for future disappointment if the P/S falls to levels more in line with the recent negative growth rates.
The Final Word
Dragon King Group Holdings' stock has a lot of momentum behind it lately, which has brought its P/S level with 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.
Our look at Dragon King Group Holdings revealed its shrinking revenues over the medium-term haven't impacted the P/S as much as we anticipated, given the industry is set to grow. When we see revenue heading backwards in the context of growing industry forecasts, it'd make sense to expect a possible share price decline on the horizon, sending the moderate P/S lower. Unless the recent medium-term conditions improve markedly, investors will have a hard time accepting the share price as fair value.
Plus, you should also learn about these 6 warning signs we've spotted with Dragon King Group Holdings (including 4 which are significant).
If these risks are making you reconsider your opinion on Dragon King Group Holdings, explore our interactive list of high quality stocks to get an idea of what else is out there.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
Dragon King Group Holdings Limited (HKG:8493)股票經歷過動盪期後,上個月漲幅驚人,上漲了67%。最新的漲幅使其過去12個月的漲幅總額達到了驚人的350%。
儘管股價反彈,但是Dragon King Group Holdings的市銷率仍然只有0.5x,與香港酒店行業的中位數市銷率接近0.8x。儘管如此,不明確解釋市銷率會讓投資者忽略一個明顯的機會或昂貴的錯誤。
SEHK:8493市銷率與行業對比(2024年6月26日)
Dragon King Group Holdings的表現
近期對Dragon King Group Holdings來說相當有利,其營業收入增長非常迅速。也許市場預計未來的營收表現將趨緩,所以市銷率沒有上漲。如果那並沒有發生,那麼現有股東有理由對股票價格未來的走向感到樂觀。
我們沒有分析師預測,但可以通過免費的Dragon King Group Holdings收益、營業收入和現金流報告來了解最近的趨勢,來爲未來埋下伏筆。
有了這些信息,我們發現Dragon King Group Holdings的市銷率與行業相當。似乎大多數投資者忽略了最近的低增長率,並希望公司的業務前景會出現反轉。如果市銷率下降到與最近的負增長率相一致的水平,那麼現有的股東有可能會在未來失望。
最終結論
Dragon King Group Holdings的股票最近有很大的勢頭,使其市銷率與行業水平持平。通常情況下,當做投資決策時,我們不會過多考慮市銷率,但它可以揭示其他市場參與者對公司的看法。
我們分析了Dragon King Group Holdings後發現,雖然其營收中期內一直在下降,但其市銷率並沒有像我們預想的那樣下降,而是與行業增長相同。當我們發現營收在增長的行業背景下出現逆勢下滑時,合理的預期是股票價格可能會下跌,市銷率會適度下降。除非最近中期的情況得到明顯改善,否則投資者很難接受當前的股票價格爲合理價值。
此外,還應該了解我們發現的Dragon King Group Holdings的6個警告信號(包括4個重要信號)。
如果這些風險讓您重新考慮對Dragon King Group Holdings的看法,請查看我們的高質量股票互動列表,以了解其他投資機會。