Art Group Holdings Limited (HKG:565) shareholders that were waiting for something to happen have been dealt a blow with a 47% share price drop in the last month. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 31% share price drop.
Although its price has dipped substantially, given around half the companies in Hong Kong's Real Estate industry have price-to-sales ratios (or "P/S") below 0.6x, you may still consider Art Group Holdings as a stock to avoid entirely with its 3.2x P/S ratio. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.
What Does Art Group Holdings' P/S Mean For Shareholders?
As an illustration, revenue has deteriorated at Art Group Holdings over the last year, which is not ideal at all. It might be that many expect the company to still outplay most other companies over the coming period, which has kept the P/S from collapsing. If not, then existing shareholders may be quite 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 Art Group Holdings will help you shine a light on its historical performance.
How Is Art Group Holdings' Revenue Growth Trending?
There's an inherent assumption that a company should far outperform the industry for P/S ratios like Art Group Holdings' to be considered reasonable.
Retrospectively, the last year delivered a frustrating 22% decrease to the company's top line. As a result, revenue from three years ago have also fallen 10% overall. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.
Comparing that to the industry, which is predicted to deliver 7.9% growth in the next 12 months, the company's downward momentum based on recent medium-term revenue results is a sobering picture.
With this in mind, we find it worrying that Art Group Holdings' P/S exceeds that of its industry peers. It seems most investors are ignoring the recent poor growth rate and are hoping for a turnaround in the company's business prospects. Only the boldest would assume these prices are sustainable as a continuation of recent revenue trends is likely to weigh heavily on the share price eventually.
The Bottom Line On Art Group Holdings' P/S
Art Group Holdings' shares may have suffered, but its P/S remains high. 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 Art Group Holdings currently trades on a much higher than expected P/S since its recent revenues have been in decline over the medium-term. When we see revenue heading backwards and underperforming the industry forecasts, we feel the possibility of the share price declining is very real, bringing the P/S back into the realm of reasonability. Unless the recent medium-term conditions improve markedly, investors will have a hard time accepting the share price as fair value.
Before you settle on your opinion, we've discovered 3 warning signs for Art Group Holdings (2 are a bit unpleasant!) that you should be aware of.
If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).
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.
上個月股價下跌了47%,使一直在等待事情發生的Art Group Holdings Limited(HKG: 565)股東受到了打擊。在過去十二個月中已經持股的股東沒有獲得回報,反而坐視股價下跌了31%。
儘管其價格已大幅下跌,但鑑於香港房地產行業中約有一半的公司的市銷比(或 “市銷率”)低於0.6倍,您仍然可以將Art Group Holdings視爲股票,以其3.2倍的市銷率完全避免。但是,市銷率可能很高是有原因的,需要進一步調查以確定其是否合理。
藝術集團控股的市銷率對股東意味着什麼?
舉例來說,去年,Art Group Holdings的收入有所下降,這根本不理想。許多人可能預計,在未來一段時間內,該公司的表現仍將超過大多數其他公司,這阻止了市銷售率的暴跌。如果不是,那麼現有股東可能會對股價的可行性感到非常擔憂。
想全面了解公司的收益、收入和現金流嗎?然後,我們關於Art Group Holdings的免費報告將幫助您了解其歷史表現。
Art Group Holdings的收入增長趨勢如何?
人們固有的假設是,如果像Art Group Holdings這樣的市銷率被認爲是合理的,公司的表現應該遠遠超過該行業。