The JY Grandmark Holdings Limited (HKG:2231) share price has fared very poorly over the last month, falling by a substantial 52%. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 69% loss during that time.
Although its price has dipped substantially, you could still be forgiven for feeling indifferent about JY Grandmark Holdings' P/S ratio of 0.2x, since the median price-to-sales (or "P/S") ratio for the Real Estate industry in Hong Kong is also close to 0.6x. 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.
What Does JY Grandmark Holdings' P/S Mean For Shareholders?
Recent times have been quite advantageous for JY Grandmark Holdings as its revenue has been rising very briskly. 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.
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 JY Grandmark Holdings' earnings, revenue and cash flow.
Do Revenue Forecasts Match The P/S Ratio?
There's an inherent assumption that a company should be matching the industry for P/S ratios like JY Grandmark Holdings' to be considered reasonable.
Retrospectively, the last year delivered an explosive gain to the company's top line. In spite of this unbelievable short-term growth, the latest three year period hasn't been as great in aggregate as it didn't manage to provide any growth at all. Therefore, it's fair to say that revenue growth has been inconsistent recently for the company.
Comparing the recent medium-term revenue trends against the industry's one-year growth forecast of 5.1% shows it's noticeably less attractive.
With this in mind, we find it intriguing that JY Grandmark Holdings' P/S is comparable to that of its industry peers. Apparently many investors in the company are less bearish than recent times would indicate and aren't willing to let go of their stock right now. Maintaining these prices will be difficult to achieve as a continuation of recent revenue trends is likely to weigh down the shares eventually.
The Key Takeaway
With its share price dropping off a cliff, the P/S for JY Grandmark Holdings looks to be in line with the rest of the Real Estate industry. 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.
We've established that JY Grandmark Holdings' average P/S is a bit surprising since its recent three-year growth is lower than the wider industry forecast. Right now we are uncomfortable with the P/S as this revenue performance isn't likely to support a more positive sentiment for long. If recent medium-term revenue trends continue, the probability of a share price decline will become quite substantial, placing shareholders at risk.
Plus, you should also learn about these 3 warning signs we've spotted with JY Grandmark Holdings (including 2 which make us uncomfortable).
If these risks are making you reconsider your opinion on JY Grandmark Holdings, explore our interactive list of high quality stocks to get an idea of what else is out there.
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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。