Vietnam Manufacturing and Export Processing (Holdings) Limited (HKG:422) shares have continued their recent momentum with a 43% gain in the last month alone. The last month tops off a massive increase of 118% in the last year.

Although its price has surged higher, you could still be forgiven for feeling indifferent about Vietnam Manufacturing and Export Processing (Holdings)'s P/S ratio of 0.4x, since the median price-to-sales (or "P/S") ratio for the Auto industry in Hong Kong is also close to 0.6x. 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.

Check out our latest analysis for Vietnam Manufacturing and Export Processing (Holdings)

How Has Vietnam Manufacturing and Export Processing (Holdings) Performed Recently?

Recent times have been quite advantageous for Vietnam Manufacturing and Export Processing (Holdings) as its revenue has been rising very briskly. Perhaps the market is expecting future revenue performance to taper off, which has kept the P/S from rising. If that doesn't eventuate, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

Is There Some Revenue Growth Forecasted For Vietnam Manufacturing and Export Processing (Holdings)?

In order to justify its P/S ratio, Vietnam Manufacturing and Export Processing (Holdings) would need to produce growth that's similar to the industry.

If we review the last year of revenue growth, the company posted a terrific increase of 43%. The latest three year period has also seen an excellent 34% overall rise in revenue, aided by its short-term performance. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Comparing the recent medium-term revenue trends against the industry's one-year growth forecast of 38% shows it's noticeably less attractive.

With this information, we find it interesting that Vietnam Manufacturing and Export Processing (Holdings) is trading at a fairly similar P/S compared to the industry. It seems most investors are ignoring the fairly limited recent growth rates and are willing to pay up for exposure to the stock. Maintaining these prices will be difficult to achieve as a continuation of recent revenue trends is likely to weigh down the shares eventually.

What We Can Learn From Vietnam Manufacturing and Export Processing (Holdings)'s P/S?

Its shares have lifted substantially and now Vietnam Manufacturing and Export Processing (Holdings)'s P/S is back within range of the industry median. 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.

Our examination of Vietnam Manufacturing and Export Processing (Holdings) revealed its poor three-year revenue trends aren't resulting in a lower P/S as per our expectations, given they look worse than current industry outlook. Right now we are uncomfortable with the P/S as this revenue performance isn't likely to support a more positive sentiment for long. Unless the recent medium-term conditions improve, it's hard to accept the current share price as fair value.

Before you settle on your opinion, we've discovered 1 warning sign for Vietnam Manufacturing and Export Processing (Holdings) 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).

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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.