Hoe Leong Corporation Ltd. (SGX:H20) Shares May Have Slumped 50% But Getting In Cheap Is Still Unlikely
Hoe Leong Corporation Ltd. (SGX:H20) Shares May Have Slumped 50% But Getting In Cheap Is Still Unlikely
Hoe Leong Corporation Ltd. (SGX:H20) shareholders won't be pleased to see that the share price has had a very rough month, dropping 50% and undoing the prior period's positive performance. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 50% loss during that time.
In spite of the heavy fall in price, it's still not a stretch to say that Hoe Leong's price-to-sales (or "P/S") ratio of 0.4x right now seems quite "middle-of-the-road" compared to the Machinery industry in Singapore, where the median P/S ratio is around 0.5x. 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 Hoe Leong Has Been Performing
For instance, Hoe Leong's receding revenue in recent times would have to be some food for thought. It might be that many expect the company to put the disappointing revenue performance behind them over the coming period, which has kept the P/S from falling. If you like the company, you'd at least be hoping this is the case so that you could potentially pick up some stock while it's not quite in favour.
We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Hoe Leong's earnings, revenue and cash flow.Do Revenue Forecasts Match The P/S Ratio?
The only time you'd be comfortable seeing a P/S like Hoe Leong's is when the company's growth is tracking the industry closely.
Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 4.3%. As a result, revenue from three years ago have also fallen 7.3% overall. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.
Weighing that medium-term revenue trajectory against the broader industry's one-year forecast for expansion of 9.6% shows it's an unpleasant look.
With this in mind, we find it worrying that Hoe Leong's P/S exceeds that of its industry peers. It seems most investors are ignoring the recent poor growth rate and are hoping for a turnaround in the company's business prospects. Only the boldest would assume these prices are sustainable as a continuation of recent revenue trends is likely to weigh on the share price eventually.
The Final Word
Following Hoe Leong's share price tumble, its P/S is just clinging on to the industry median P/S. 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.
The fact that Hoe Leong currently trades at a P/S on par with the rest of the industry is surprising to us since its recent revenues have been in decline over the medium-term, all while the industry is set to grow. Even though it matches the industry, we're uncomfortable with the current P/S ratio, as this dismal revenue performance is unlikely to support a more positive sentiment for long. If recent medium-term revenue trends continue, it will place shareholders' investments at risk and potential investors in danger of paying an unnecessary premium.
Before you settle on your opinion, we've discovered 4 warning signs for Hoe Leong (1 is a bit concerning!) 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).
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.
Hoe Leong Corporation Ltd.(新加坡證券交易所股票代碼:H20)股東不會高興地看到股價經歷了一個非常艱難的月份,下跌了50%,抵消了前一時期的積極表現。對於股東來說,最近的下跌結束了災難性的十二個月,在此期間,股東虧損了50%。
儘管價格大幅下跌,但可以毫不誇張地說,與新加坡機械行業相比,Hoe Leong的0.4倍市銷率(或 “市銷率”)的中位數約爲0.5倍。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。
Hoe Leong 的表現如何
例如,Hoe Leong最近收入的下降一定值得深思。許多人可能預計,該公司將在未來一段時間內將令人失望的收入表現拋在腦後,這阻止了市銷售率的下降。如果你喜歡這家公司,你至少希望情況確實如此,這樣你就有可能在它不太受青睞的情況下買入一些股票。
我們沒有分析師的預測,但您可以查看我們關於Hoe Leong收益、收入和現金流的免費報告,了解最近的趨勢如何爲公司未來做好準備。收入預測與市銷率相匹配嗎?
只有當公司的增長密切關注行業時,你才能放心地看到像和亮這樣的市銷率。
首先回顧一下,該公司去年的收入增長並不令人興奮,因爲它公佈了令人失望的4.3%的跌幅。結果,三年前的總體收入也下降了7.3%。因此,股東會對中期收入增長率感到悲觀。
將中期收入軌跡與整個行業對9.6%的增長預測進行權衡,可以看出這是一個令人不快的表情。
考慮到這一點,我們感到擔憂的是,Hoe Leong的市銷率超過了業內同行。看來大多數投資者都忽視了最近的糟糕增長率,並希望公司的業務前景有所好轉。只有最大膽的人才會假設這些價格是可持續的,因爲近期收入趨勢的延續最終可能會壓制股價。
最後一句話
在和亮股價暴跌之後,其市盈率僅保持在行業市盈率中位數。它認爲,市銷售率在某些行業中是衡量價值的較差指標,但它可能是一個有力的商業信心指標。
Hoe Leong目前的市銷率與該行業其他公司持平,這一事實令我們感到驚訝,因爲Hoe Leong最近的收入在中期內一直在下降,而該行業仍將增長。儘管它與行業相匹配,但我們對當前的市銷率感到不舒服,因爲這種慘淡的收入表現不太可能長期支持更積極的情緒。如果最近的中期收入趨勢持續下去,將使股東的投資面臨風險,潛在投資者面臨支付不必要的溢價的危險。
在你確定自己的觀點之前,我們已經發現了 Hoe Leong 的 4 個警告信號(1 個有點令人擔憂!)你應該注意的。
如果你喜歡實力雄厚的公司盈利,那麼你會想看看這份以低市盈率(但已證明可以增加收益)的有趣公司的免費名單。
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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