YLZ Information Technology Co.,Ltd (SZSE:300096) shareholders won't be pleased to see that the share price has had a very rough month, dropping 37% and undoing the prior period's positive performance. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 30% share price drop.
Since its price has dipped substantially, YLZ Information TechnologyLtd may be sending very bullish signals at the moment with its price-to-sales (or "P/S") ratio of 2.6x, since almost half of all companies in the Software industry in China have P/S ratios greater than 6.3x and even P/S higher than 11x are not unusual. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so limited.
See our latest analysis for YLZ Information TechnologyLtd
How Has YLZ Information TechnologyLtd Performed Recently?
For instance, YLZ Information TechnologyLtd's receding revenue in recent times would have to be some food for thought. Perhaps the market believes the recent revenue performance isn't good enough to keep up the industry, causing the P/S ratio to suffer. Those who are bullish on YLZ Information TechnologyLtd will be hoping that this isn't the case so that they can pick up the stock at a lower valuation.
Although there are no analyst estimates available for YLZ Information TechnologyLtd, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
Is There Any Revenue Growth Forecasted For YLZ Information TechnologyLtd?
The only time you'd be truly comfortable seeing a P/S as depressed as YLZ Information TechnologyLtd's is when the company's growth is on track to lag the industry decidedly.
Retrospectively, the last year delivered a frustrating 2.3% decrease to the company's top line. The last three years don't look nice either as the company has shrunk revenue by 32% in aggregate. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.
Weighing that medium-term revenue trajectory against the broader industry's one-year forecast for expansion of 36% shows it's an unpleasant look.
In light of this, it's understandable that YLZ Information TechnologyLtd's P/S would sit below the majority of other companies. However, we think shrinking revenues are unlikely to lead to a stable P/S over the longer term, which could set up shareholders for future disappointment. There's potential for the P/S to fall to even lower levels if the company doesn't improve its top-line growth.
What Does YLZ Information TechnologyLtd's P/S Mean For Investors?
Having almost fallen off a cliff, YLZ Information TechnologyLtd's share price has pulled its P/S way down as well. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.
Our examination of YLZ Information TechnologyLtd confirms that the company's shrinking revenue over the past medium-term is a key factor in its low price-to-sales ratio, given the industry is projected to grow. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises either. 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 is also worth noting that we have found 2 warning signs for YLZ Information TechnologyLtd that you need to take into consideration.
It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).
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.
YLZ Information TechnologyLtd的股价几乎跌下了悬崖,其市销率也大幅下降。仅使用市销率来确定是否应该出售股票是不明智的,但它可以作为公司未来前景的实用指南。
我们对YLZ Information TechnologyLtd的审查证实,鉴于该行业预计将增长,该公司在过去的中期收入萎缩是其低市销率的关键因素。目前,股东们正在接受低市销率,因为他们承认未来的收入可能也不会带来任何惊喜。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。