Despite an already strong run, Nexwise Intelligence China Limited (SZSE:301248) shares have been powering on, with a gain of 34% in the last thirty days. While recent buyers may be laughing, long-term holders might not be as pleased since the recent gain only brings the stock back to where it started a year ago.

Although its price has surged higher, Nexwise Intelligence China's price-to-sales (or "P/S") ratio of 4.2x might still make it look like a buy right now compared to the Software industry in China, where around half of the companies have P/S ratios above 7.4x and even P/S above 13x are quite common. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

How Nexwise Intelligence China Has Been Performing

While the industry has experienced revenue growth lately, Nexwise Intelligence China's revenue has gone into reverse gear, which is not great. It seems that many are expecting the poor revenue performance to persist, which has repressed the P/S ratio. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

Is There Any Revenue Growth Forecasted For Nexwise Intelligence China?

Nexwise Intelligence China's P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.

Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 8.0%. As a result, revenue from three years ago have also fallen 25% overall. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.

Turning to the outlook, the next year should generate growth of 36% as estimated by the lone analyst watching the company. That's shaping up to be similar to the 33% growth forecast for the broader industry.

With this in consideration, we find it intriguing that Nexwise Intelligence China's P/S is lagging behind its industry peers. Apparently some shareholders are doubtful of the forecasts and have been accepting lower selling prices.

What Does Nexwise Intelligence China's P/S Mean For Investors?

The latest share price surge wasn't enough to lift Nexwise Intelligence China's P/S close to the industry median. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

It looks to us like the P/S figures for Nexwise Intelligence China remain low despite growth that is expected to be in line with other companies in the industry. When we see middle-of-the-road revenue growth like this, we assume it must be the potential risks that are what is placing pressure on the P/S ratio. Perhaps investors are concerned that the company could underperform against the forecasts over the near term.

Before you settle on your opinion, we've discovered 1 warning sign for Nexwise Intelligence China that you should be aware of.

If these risks are making you reconsider your opinion on Nexwise Intelligence China, 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.