King International Investment Limited (HKG:928) shares have had a really impressive month, gaining 30% after a shaky period beforehand. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 32% in the last twelve months.
Although its price has surged higher, there still wouldn't be many who think King International Investment's price-to-sales (or "P/S") ratio of 0.6x is worth a mention when the median P/S in Hong Kong's Healthcare industry is similar at about 1.1x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.
View our latest analysis for King International Investment
What Does King International Investment's P/S Mean For Shareholders?
Recent times have been quite advantageous for King International Investment 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 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.
Although there are no analyst estimates available for King International Investment, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
Is There Some Revenue Growth Forecasted For King International Investment?
King International Investment'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.
If we review the last year of revenue growth, we see the company's revenues grew exponentially. The amazing performance means it was also able to grow revenue by 69% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.
Weighing that recent medium-term revenue trajectory against the broader industry's one-year forecast for expansion of 17% shows it's about the same on an annualised basis.
With this in consideration, it's clear to see why King International Investment's P/S matches up closely to its industry peers. It seems most investors are expecting to see average growth rates continue into the future and are only willing to pay a moderate amount for the stock.
The Key Takeaway
King International Investment's stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. 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.
As we've seen, King International Investment's three-year revenue trends seem to be contributing to its P/S, given they look similar to current industry expectations. Currently, with a past revenue trend that aligns closely wit the industry outlook, shareholders are confident the company's future revenue outlook won't contain any major surprises. If recent medium-term revenue trends continue, it's hard to see the share price moving strongly in either direction in the near future under these circumstances.
It's always necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with King International Investment, and understanding these should be part of your investment process.
If these risks are making you reconsider your opinion on King International Investment, 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.
King International Investment的股票最近势头强劲,这使其市销率与业内其他公司相比有所上升。尽管市销率不应该成为决定你是否买入股票的决定性因素,但它是衡量收入预期的有力晴雨表。
正如我们所见,King International Investment的三年收入趋势似乎正在提高其市销率,因为它们看起来与当前的行业预期相似。目前,由于过去的收入趋势与行业前景非常吻合,股东们相信公司未来的收入前景不会出现任何重大意外。如果最近的中期收入趋势继续下去,在这种情况下,很难看到股价在不久的将来双向强劲走势。