The HY Energy Group Co.,Ltd (SHSE:600387) share price has fared very poorly over the last month, falling by a substantial 28%. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 35% share price drop.
Even after such a large drop in price, it would still be understandable if you think HY Energy GroupLtd is a stock with good investment prospects with a price-to-sales ratios (or "P/S") of 0.6x, considering almost half the companies in China's Oil and Gas industry have P/S ratios above 1.3x. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.
What Does HY Energy GroupLtd's P/S Mean For Shareholders?
For instance, HY Energy GroupLtd's receding revenue in recent times would have to be some food for thought. It might be that many expect the disappointing revenue performance to continue or accelerate, which has repressed the P/S. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of 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 HY Energy GroupLtd's earnings, revenue and cash flow.
Do Revenue Forecasts Match The Low P/S Ratio?
The only time you'd be truly comfortable seeing a P/S as low as HY Energy GroupLtd's is when the company's growth is on track to lag the industry.
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 53%. The last three years don't look nice either as the company has shrunk revenue by 46% in aggregate. 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 4.6% shows it's an unpleasant look.
In light of this, it's understandable that HY Energy GroupLtd's P/S would sit below the majority of other companies. Nonetheless, there's no guarantee the P/S has reached a floor yet with revenue going in reverse. Even just maintaining these prices could be difficult to achieve as recent revenue trends are already weighing down the shares.
The Final Word
HY Energy GroupLtd's recently weak share price has pulled its P/S back below other Oil and Gas companies. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.
Our examination of HY Energy GroupLtd confirms that the company's shrinking revenue over the past medium-term is a key factor in its low price-to-sales ratio, given the industry is projected to grow. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. Given the current circumstances, it seems unlikely that the share price will experience any significant movement in either direction in the near future if recent medium-term revenue trends persist.
Don't forget that there may be other risks. For instance, we've identified 2 warning signs for HY Energy GroupLtd (1 shouldn't be ignored) you should be aware of.
It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).
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.
HY 能源集團有限公司, Ltd(上海證券交易所代碼:600387)的股價在上個月表現非常糟糕,大幅下跌了28%。在過去十二個月中已經持股的股東沒有獲得回報,反而坐視股價下跌了35%。
即使在價格大幅下跌之後,考慮到中國石油和天然氣行業中將近一半的公司的市銷率高於1.3倍,你認爲HY Energy GroupLtd是一隻具有良好投資前景的股票,其市銷率(或 “市盈率”)爲0.6倍,還是可以理解的。但是,僅按面值計算市銷率是不明智的,因爲可以解釋其有限的原因。
HY Energy GroupLtd的市銷率對股東意味着什麼?
例如,HY Energy GroupLtd最近收入的下降值得深思。許多人可能預計,令人失望的收入表現將持續或加速,這抑制了市銷率。如果你喜歡這家公司,你會希望情況並非如此,這樣你就有可能在股票失寵的時候買入一些股票。
我們沒有分析師的預測,但您可以查看我們關於HY Energy GroupLtd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。
收入預測與低市銷率相匹配嗎?
只有當公司的增長有望落後於該行業時,你才能真正放心地看到像HY Energy GroupLtd一樣低的市銷率。