K & P International Holdings Limited (HKG:675) shareholders would be excited to see that the share price has had a great month, posting a 28% gain and recovering from prior weakness. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 18% over that time.
Although its price has surged higher, you could still be forgiven for feeling indifferent about K & P International Holdings' P/S ratio of 0.7x, since the median price-to-sales (or "P/S") ratio for the Electronic industry in Hong Kong is also close to 0.4x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.
How Has K & P International Holdings Performed Recently?
For example, consider that K & P International Holdings' financial performance has been poor lately as its revenue has been in decline. One possibility is that the P/S is moderate because investors think the company might still do enough to be in line with the broader industry in the near future. If you like the company, you'd at least be hoping this is 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 K & P International Holdings, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
Do Revenue Forecasts Match The P/S Ratio?
There's an inherent assumption that a company should be matching the industry for P/S ratios like K & P International Holdings' to be considered reasonable.
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 32%. The last three years don't look nice either as the company has shrunk revenue by 46% in aggregate. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.
Weighing that medium-term revenue trajectory against the broader industry's one-year forecast for expansion of 20% shows it's an unpleasant look.
With this information, we find it concerning that K & P International Holdings is trading at a fairly similar P/S compared to the industry. Apparently many investors in the company are way less bearish than recent times would indicate and aren't willing to let go of their stock right now. There's a good chance existing shareholders are setting themselves up for future disappointment if the P/S falls to levels more in line with the recent negative growth rates.
What Does K & P International Holdings' P/S Mean For Investors?
K & P International Holdings' stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. 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 find it unexpected that K & P International Holdings trades at a P/S ratio that is comparable to the rest of the industry, despite experiencing declining revenues during the medium-term, while the industry as a whole is expected to grow. When we see revenue heading backwards in the context of growing industry forecasts, it'd make sense to expect a possible share price decline on the horizon, sending the moderate P/S lower. Unless the the circumstances surrounding the recent medium-term improve, it wouldn't be wrong to expect a a difficult period ahead for the company's shareholders.
Don't forget that there may be other risks. For instance, we've identified 3 warning signs for K & P International Holdings (1 is a bit concerning) you should be aware of.
If these risks are making you reconsider your opinion on K & P International Holdings, explore our interactive list of high quality stocks to get an idea of what else is out there.
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有了這些信息,我們發現K&P International Holdings的交易市銷率與該行業相似。顯然,該公司的許多投資者並不像最近所表明的那樣看跌,他們現在不願意放棄股票。如果市銷率降至更符合近期負增長率的水平,現有股東很有可能爲未來的失望做好準備。
K&P國際控股的市銷率對投資者意味着什麼?
K&P International Holdings的股票最近勢頭強勁,這使其市銷率與業內其他公司相比有所上升。通常,在做出投資決策時,我們謹慎行事,不要過多地考慮市售比率,儘管這可以揭示其他市場參與者對公司的看法。
我們發現,儘管中期收入下降,但K&P International Holdings的市銷率與該行業其他部門相當,這出乎意料,而整個行業預計將增長。在行業預測不斷增長的背景下,當我們看到收入倒退時,預計股價可能會下跌,從而使溫和的市銷率走低是有道理的。除非近期中期情況有所改善,否則預計公司股東將面臨艱難時期是沒有錯的。