The Chanjet Information Technology Company Limited (HKG:1588) share price has done very well over the last month, posting an excellent gain of 51%. The last 30 days bring the annual gain to a very sharp 73%.

In spite of the firm bounce in price, there still wouldn't be many who think Chanjet Information Technology's price-to-sales (or "P/S") ratio of 1.7x is worth a mention when it essentially matches the median P/S in Hong Kong's Software industry. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

How Has Chanjet Information Technology Performed Recently?

Recent times have been advantageous for Chanjet Information Technology as its revenues have been rising faster than most other companies. It might be that many expect the strong revenue performance to wane, which has kept the P/S ratio from rising. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

Is There Some Revenue Growth Forecasted For Chanjet Information Technology?

Chanjet Information Technology's P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.

Taking a look back first, we see that the company grew revenue by an impressive 22% last year. Pleasingly, revenue has also lifted 69% in aggregate from three years ago, thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing revenue over that time.

Shifting to the future, estimates from the one analyst covering the company suggest revenue should grow by 19% each year over the next three years. That's shaping up to be materially higher than the 15% each year growth forecast for the broader industry.

With this in consideration, we find it intriguing that Chanjet Information Technology's P/S is closely matching its industry peers. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.

What We Can Learn From Chanjet Information Technology's P/S?

Chanjet Information Technology appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

We've established that Chanjet Information Technology currently trades on a lower than expected P/S since its forecasted revenue growth is higher than the wider industry. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. It appears some are indeed anticipating revenue instability, because these conditions should normally provide a boost to the share price.

The company's balance sheet is another key area for risk analysis. Our free balance sheet analysis for Chanjet Information Technology with six simple checks will allow you to discover any risks that could be an issue.

If these risks are making you reconsider your opinion on Chanjet Information Technology, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.