The Shenzhen SunXing Light Alloys Materials Co.,Ltd. (SHSE:603978) share price has fared very poorly over the last month, falling by a substantial 28%. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 43% in that time.

Although its price has dipped substantially, it's still not a stretch to say that Shenzhen SunXing Light Alloys MaterialsLtd's price-to-sales (or "P/S") ratio of 1.3x right now seems quite "middle-of-the-road" compared to the Metals and Mining industry in China, where the median P/S ratio is around 1.1x. 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.

What Does Shenzhen SunXing Light Alloys MaterialsLtd's P/S Mean For Shareholders?

Shenzhen SunXing Light Alloys MaterialsLtd has been doing a decent job lately as it's been growing revenue at a reasonable pace. One possibility is that the P/S is moderate because investors think this good revenue growth might only be parallel to the broader industry in the near future. If not, then at least existing shareholders probably aren't too pessimistic about the future direction of the share price.

Although there are no analyst estimates available for Shenzhen SunXing Light Alloys MaterialsLtd, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.

How Is Shenzhen SunXing Light Alloys MaterialsLtd's Revenue Growth Trending?

Shenzhen SunXing Light Alloys MaterialsLtd's P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.

Retrospectively, the last year delivered a decent 4.3% gain to the company's revenues. This was backed up an excellent period prior to see revenue up by 56% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

It's interesting to note that the rest of the industry is similarly expected to grow by 16% over the next year, which is fairly even with the company's recent medium-term annualised growth rates.

With this information, we can see why Shenzhen SunXing Light Alloys MaterialsLtd is trading at a fairly similar P/S to the industry. Apparently shareholders are comfortable to simply hold on assuming the company will continue keeping a low profile.

The Bottom Line On Shenzhen SunXing Light Alloys MaterialsLtd's P/S

With its share price dropping off a cliff, the P/S for Shenzhen SunXing Light Alloys MaterialsLtd looks to be in line with the rest of the Metals and Mining industry. 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.

As we've seen, Shenzhen SunXing Light Alloys MaterialsLtd's three-year revenue trends seem to be contributing to its P/S, given they look similar to current industry expectations. With previous revenue trends that keep up with the current industry outlook, it's hard to justify the company's P/S ratio deviating much from it's current point. Unless the recent medium-term conditions change, they will continue to support the share price at these levels.

Plus, you should also learn about these 2 warning signs we've spotted with Shenzhen SunXing Light Alloys MaterialsLtd.

If these risks are making you reconsider your opinion on Shenzhen SunXing Light Alloys MaterialsLtd, explore our interactive list of high quality stocks to get an idea of what else is out there.

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