The Hainan Meilan International Airport Company Limited (HKG:357) share price has done very well over the last month, posting an excellent gain of 30%. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 45% in the last twelve months.

Even after such a large jump in price, it's still not a stretch to say that Hainan Meilan International Airport's price-to-sales (or "P/S") ratio of 1.7x right now seems quite "middle-of-the-road" compared to the Infrastructure industry in Hong Kong, where the median P/S ratio is around 1.4x. 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.

How Has Hainan Meilan International Airport Performed Recently?

With revenue growth that's superior to most other companies of late, Hainan Meilan International Airport has been doing relatively well. One possibility is that the P/S ratio is moderate because investors think this strong revenue performance might be about to tail off. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

Do Revenue Forecasts Match The P/S Ratio?

There's an inherent assumption that a company should be matching the industry for P/S ratios like Hainan Meilan International Airport's to be considered reasonable.

If we review the last year of revenue growth, the company posted a terrific increase of 83%. Pleasingly, revenue has also lifted 52% in aggregate from three years ago, thanks to the last 12 months of growth. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Turning to the outlook, the next three years should generate growth of 15% each year as estimated by the five analysts watching the company. That's shaping up to be similar to the 14% per year growth forecast for the broader industry.

With this in mind, it makes sense that Hainan Meilan International Airport's P/S is closely matching its industry peers. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

What Does Hainan Meilan International Airport's P/S Mean For Investors?

Hainan Meilan International Airport's stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of 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.

A Hainan Meilan International Airport's P/S seems about right to us given the knowledge that analysts are forecasting a revenue outlook that is similar to the Infrastructure industry. At this stage investors feel the potential for an improvement or deterioration in revenue isn't great enough to push P/S in a higher or lower direction. All things considered, if the P/S and revenue estimates contain no major shocks, then it's hard to see the share price moving strongly in either direction in the near future.

Before you settle on your opinion, we've discovered 1 warning sign for Hainan Meilan International Airport 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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