Sensata Technologies Holding Plc's (NYSE:ST) Popularity With Investors Is Under Threat From Overpricing
Sensata Technologies Holding Plc's (NYSE:ST) Popularity With Investors Is Under Threat From Overpricing
There wouldn't be many who think Sensata Technologies Holding plc's (NYSE:ST) price-to-sales (or "P/S") ratio of 1.3x is worth a mention when the median P/S for the Electrical industry in the United States is similar at about 1.7x. 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 Sensata Technologies Holding Has Been Performing
Sensata Technologies Holding could be doing better as it's been growing revenue less than most other companies lately. Perhaps the market is expecting future revenue performance to lift, which has kept the P/S from declining. If not, then existing shareholders may be a little nervous about the viability of the share price.
Want the full picture on analyst estimates for the company? Then our free report on Sensata Technologies Holding will help you uncover what's on the horizon.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 Sensata Technologies Holding's to be considered reasonable.
If we review the last year of revenue, the company posted a result that saw barely any deviation from a year ago. Although pleasingly revenue has lifted 33% in aggregate from three years ago, notwithstanding the last 12 months. So while the company has done a solid job in the past, it's somewhat concerning to see revenue growth decline as much as it has.
Looking ahead now, revenue is anticipated to climb by 4.9% per annum during the coming three years according to the analysts following the company. Meanwhile, the rest of the industry is forecast to expand by 35% per annum, which is noticeably more attractive.
With this in mind, we find it intriguing that Sensata Technologies Holding's P/S is closely matching its industry peers. It seems most investors are ignoring the fairly limited growth expectations and are willing to pay up for exposure to the stock. Maintaining these prices will be difficult to achieve as this level of revenue growth is likely to weigh down the shares eventually.
The Final Word
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.
When you consider that Sensata Technologies Holding's revenue growth estimates are fairly muted compared to the broader industry, it's easy to see why we consider it unexpected to be trading at its current P/S ratio. At present, we aren't confident in the P/S as the predicted future revenues aren't likely to support a more positive sentiment for long. A positive change is needed in order to justify the current price-to-sales ratio.
Plus, you should also learn about this 1 warning sign we've spotted with Sensata Technologies Holding.
If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.
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.
當美國電氣行業的市盈率中位數相似,約爲1.7倍時,不會有多少人認爲森薩塔科技控股有限公司(紐約證券交易所代碼:ST)的1.3倍市銷率(或 “市盈率”)值得一提。但是,不加解釋地忽略市銷率是不明智的,因爲投資者可能會忽視一個明顯的機會或一個代價高昂的錯誤。
森薩塔科技控股公司的表現如何
森薩塔科技控股公司的表現可能會更好,因爲其最近收入的增長幅度低於大多數其他公司。也許市場預計未來的收入表現將有所提高,這阻止了市銷率的下降。如果不是,那麼現有股東可能會對股價的可行性有些緊張。
想全面了解分析師對公司的估計嗎?然後,我們關於森薩塔科技控股公司的免費報告將幫助您發現即將發生的事情。收入預測與市銷率相匹配嗎?
人們固有的假設是,公司應該與行業相提並論,這樣像森薩塔科技控股公司這樣的市銷率才算合理。
如果我們回顧一下去年的收入,該公司公佈的業績與去年同期幾乎沒有任何偏差。儘管令人欣慰的是,儘管過去12個月,總收入仍比三年前增長了33%。因此,儘管該公司過去做得不錯,但收入增長的下降幅度卻有些令人擔憂。
展望未來,該公司的分析師表示,預計未來三年收入將每年增長4.9%。同時,預計該行業的其他部門每年將增長35%,這明顯更具吸引力。
考慮到這一點,我們發現有趣的是,森薩塔科技控股公司的市銷率與業內同行非常接近。看來大多數投資者無視相當有限的增長預期,願意爲股票敞口付出代價。維持這些價格將很難實現,因爲這種收入增長水平最終可能會壓低股價。
最後一句話
通常,我們傾向於限制使用市銷率來確定市場對公司整體健康狀況的看法。
當你考慮到Sensata Technologies Holding的收入增長預期與整個行業相比相當低迷時,不難理解我們爲何認爲以目前的市銷率進行交易是出乎意料的。目前,我們對市銷率沒有信心,因爲預期的未來收入不太可能長期支撐更積極的情緒。爲了證明當前的市銷率是合理的,需要做出積極的改變。
另外,你還應該了解我們在森薩塔科技控股公司發現的這1個警告標誌。
如果過去盈利增長穩健的公司處於困境,那麼你可能希望看到這些盈利增長強勁、市盈率低的其他公司的免費集合。
對這篇文章有反饋嗎?對內容感到擔憂?直接聯繫我們。 或者,給編輯團隊 (at) simplywallst.com 發送電子郵件。
Simply Wall St的這篇文章本質上是籠統的。我們僅使用公正的方法根據歷史數據和分析師的預測提供評論,我們的文章無意作爲財務建議。它不構成買入或賣出任何股票的建議,也沒有考慮到您的目標或財務狀況。我們的目標是爲您提供由基本數據驅動的長期重點分析。請注意,我們的分析可能不考慮最新的價格敏感型公司公告或定性材料。簡而言之,華爾街沒有持有任何上述股票的頭寸。
譯文內容由第三人軟體翻譯。
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