Despite an already strong run, DBAPPSecurity Co., Ltd. (SHSE:688023) shares have been powering on, with a gain of 27% in the last thirty days. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 42% over that time.

In spite of the firm bounce in price, DBAPPSecurity may still look like a strong buying opportunity at present with its price-to-sales (or "P/S") ratio of 2.9x, considering almost half of all companies in the Software industry in China have P/S ratios greater than 7.4x and even P/S higher than 13x aren't out of the ordinary. However, the P/S might be quite low for a reason and it requires further investigation to determine if it's justified.

What Does DBAPPSecurity's Recent Performance Look Like?

DBAPPSecurity could be doing better as its revenue has been going backwards lately while most other companies have been seeing positive revenue growth. The P/S ratio is probably low because investors think this poor revenue performance isn't going to get any better. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

How Is DBAPPSecurity's Revenue Growth Trending?

In order to justify its P/S ratio, DBAPPSecurity would need to produce anemic growth that's substantially trailing the industry.

Retrospectively, the last year delivered a frustrating 1.9% decrease to the company's top line. Even so, admirably revenue has lifted 38% in aggregate from three years ago, notwithstanding the last 12 months. So we can start by confirming that the company has generally done a very good job of growing revenue over that time, even though it had some hiccups along the way.

Turning to the outlook, the next three years should generate growth of 26% per year as estimated by the seven analysts watching the company. With the industry predicted to deliver 24% growth per annum, the company is positioned for a comparable revenue result.

With this in consideration, we find it intriguing that DBAPPSecurity's P/S is lagging behind its industry peers. It may be that most investors are not convinced the company can achieve future growth expectations.

What We Can Learn From DBAPPSecurity's P/S?

DBAPPSecurity's recent share price jump still sees fails to bring its P/S alongside the industry median. 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.

We've seen that DBAPPSecurity currently trades on a lower than expected P/S since its forecast growth is in line with the wider industry. Despite average revenue growth estimates, there could be some unobserved threats keeping the P/S low. It appears some are indeed anticipating revenue instability, because these conditions should normally provide more support to the share price.

You always need to take note of risks, for example - DBAPPSecurity has 1 warning sign we think you should be aware of.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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