Despite an already strong run, Asiaray Media Group Limited (HKG:1993) shares have been powering on, with a gain of 60% 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 28% over that time.
Even after such a large jump in price, it's still not a stretch to say that Asiaray Media Group's price-to-sales (or "P/S") ratio of 0.3x right now seems quite "middle-of-the-road" compared to the Media industry in Hong Kong, where the median P/S ratio is around 0.7x. 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.
How Asiaray Media Group Has Been Performing
For example, consider that Asiaray Media Group's 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 not, then existing shareholders may be a little nervous about the viability of the share price.
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Asiaray Media Group will help you shine a light on its historical performance.
Is There Some Revenue Growth Forecasted For Asiaray Media Group?
Asiaray Media Group'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.
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 2.7%. This has soured the latest three-year period, which nevertheless managed to deliver a decent 23% overall rise in revenue. So we can start by confirming that the company has generally done a good job of growing revenue over that time, even though it had some hiccups along the way.
This is in contrast to the rest of the industry, which is expected to grow by 11% over the next year, materially higher than the company's recent medium-term annualised growth rates.
With this in mind, we find it intriguing that Asiaray Media Group's P/S is comparable to that of its industry peers. It seems most investors are ignoring the fairly limited recent growth rates and are willing to pay up for exposure to the stock. They may be setting themselves up for future disappointment if the P/S falls to levels more in line with recent growth rates.
The Key Takeaway
Asiaray Media Group's stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.
We've established that Asiaray Media Group's average P/S is a bit surprising since its recent three-year growth is lower than the wider industry forecast. When we see weak revenue with slower than industry growth, we suspect the share price is at risk of declining, bringing the P/S back in line with expectations. Unless the recent medium-term conditions improve, it's hard to accept the current share price as fair value.
Having said that, be aware Asiaray Media Group is showing 3 warning signs in our investment analysis, and 1 of those doesn't sit too well with us.
Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.
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.
即使在价格大幅上涨之后,可以毫不夸张地说,与香港媒体行业相比,Asiaray Media Group目前0.3倍的市销率(或 “市销率”)似乎相当 “中间路线”,香港媒体行业的市销率中位数约为0.7倍。尽管这可能不会引起任何关注,但如果市销率不合理,投资者可能会错过潜在的机会或无视迫在眉睫的失望情绪。
Asiaray Media Group 的表现如何
例如,假设Asiaray Media Group最近由于收入下降而财务表现不佳。一种可能性是市销率适中,因为投资者认为公司在不久的将来可能仍然做得足够多,足以与整个行业保持一致。如果不是,那么现有股东可能会对股价的可行性有些紧张。
想全面了解公司的收益、收入和现金流吗?那么我们关于Asiaray Media Group的免费报告将帮助您了解其历史表现。
预计Asiaray Media Group的收入会有所增长吗?
Asiaray Media Group的市销率对于一家预计只会实现适度增长且重要的是表现与行业持平的公司来说是典型的。