Cheetah Net Supply Chain Service Inc. (NASDAQ:CTNT) shares have continued their recent momentum with a 32% gain in the last month alone. While recent buyers may be laughing, long-term holders might not be as pleased since the recent gain only brings the stock back to where it started a year ago.

In spite of the firm bounce in price, it's still not a stretch to say that Cheetah Net Supply Chain Service's price-to-sales (or "P/S") ratio of 0.7x right now seems quite "middle-of-the-road" compared to the Retail Distributors industry in the United States, where the median P/S ratio is around 0.9x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

What Does Cheetah Net Supply Chain Service's P/S Mean For Shareholders?

While the industry has experienced revenue growth lately, Cheetah Net Supply Chain Service's revenue has gone into reverse gear, which is not great. It might be that many expect the dour revenue performance to strengthen positively, which has kept the P/S from falling. If not, then existing shareholders may be a little nervous about the viability of the share price.

How Is Cheetah Net Supply Chain Service's Revenue Growth Trending?

In order to justify its P/S ratio, Cheetah Net Supply Chain Service would need to produce growth that's similar to the industry.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 18%. The latest three year period has seen an incredible overall rise in revenue, a stark contrast to the last 12 months. Accordingly, shareholders will be pleased, but also have some serious questions to ponder about the last 12 months.

Looking ahead now, revenue is anticipated to climb by 15% during the coming year according to the sole analyst following the company. With the industry only predicted to deliver 5.8%, the company is positioned for a stronger revenue result.

With this in consideration, we find it intriguing that Cheetah Net Supply Chain Service's P/S is closely matching its industry peers. It may be that most investors aren't convinced the company can achieve future growth expectations.

What We Can Learn From Cheetah Net Supply Chain Service's P/S?

Cheetah Net Supply Chain Service appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry 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've established that Cheetah Net Supply Chain Service currently trades on a lower than expected P/S since its forecasted revenue growth is higher than the wider industry. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. This uncertainty seems to be reflected in the share price which, while stable, could be higher given the revenue forecasts.

Plus, you should also learn about these 4 warning signs we've spotted with Cheetah Net Supply Chain Service (including 1 which is concerning).

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.

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