Those holding Kingkey Financial International (Holdings) Limited (HKG:1468) shares would be relieved that the share price has rebounded 32% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. But the last month did very little to improve the 95% share price decline over the last year.

Even after such a large jump in price, Kingkey Financial International (Holdings)'s price-to-sales (or "P/S") ratio of 1.8x might still make it look like a buy right now compared to the Capital Markets industry in Hong Kong, where around half of the companies have P/S ratios above 2.5x and even P/S above 14x are quite common. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

What Does Kingkey Financial International (Holdings)'s Recent Performance Look Like?

With revenue growth that's exceedingly strong of late, Kingkey Financial International (Holdings) has been doing very well. It might be that many expect the strong revenue performance to degrade substantially, which has repressed the P/S ratio. Those who are bullish on Kingkey Financial International (Holdings) will be hoping that this isn't the case, so that they can pick up the stock at a lower valuation.

Is There Any Revenue Growth Forecasted For Kingkey Financial International (Holdings)?

The only time you'd be truly comfortable seeing a P/S as low as Kingkey Financial International (Holdings)'s is when the company's growth is on track to lag the industry.

Taking a look back first, we see that the company grew revenue by an impressive 222% last year. Pleasingly, revenue has also lifted 268% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Comparing that recent medium-term revenue trajectory with the industry's one-year growth forecast of 38% shows it's noticeably more attractive.

With this in mind, we find it intriguing that Kingkey Financial International (Holdings)'s P/S isn't as high compared to that of its industry peers. Apparently some shareholders believe the recent performance has exceeded its limits and have been accepting significantly lower selling prices.

The Bottom Line On Kingkey Financial International (Holdings)'s P/S

Despite Kingkey Financial International (Holdings)'s share price climbing recently, its P/S still lags most other companies. 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're very surprised to see Kingkey Financial International (Holdings) currently trading on a much lower than expected P/S since its recent three-year growth is higher than the wider industry forecast. When we see robust revenue growth that outpaces the industry, we presume that there are notable underlying risks to the company's future performance, which is exerting downward pressure on the P/S ratio. At least price risks look to be very low if recent medium-term revenue trends continue, but investors seem to think future revenue could see a lot of volatility.

There are also other vital risk factors to consider and we've discovered 4 warning signs for Kingkey Financial International (Holdings) (2 can't be ignored!) that you should be aware of before investing here.

If you're unsure about the strength of Kingkey Financial International (Holdings)'s business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.