IReader Technology Co., Ltd. (SHSE:603533) Looks Inexpensive After Falling 28% But Perhaps Not Attractive Enough
IReader Technology Co., Ltd. (SHSE:603533) Looks Inexpensive After Falling 28% But Perhaps Not Attractive Enough
IReader Technology Co., Ltd. (SHSE:603533) shares have retraced a considerable 28% in the last month, reversing a fair amount of their solid recent performance. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 12% in that time.
In spite of the heavy fall in price, IReader Technology may still be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 3.5x, since almost half of all companies in the Software industry in China have P/S ratios greater than 4.5x and even P/S higher than 8x are not unusual. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.
How IReader Technology Has Been Performing
The revenue growth achieved at IReader Technology over the last year would be more than acceptable for most companies. One possibility is that the P/S is low because investors think this respectable revenue growth might actually underperform the broader industry in the near future. 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.
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on IReader Technology will help you shine a light on its historical performance.What Are Revenue Growth Metrics Telling Us About The Low P/S?
IReader Technology's P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.
Taking a look back first, we see that the company managed to grow revenues by a handy 15% last year. Pleasingly, revenue has also lifted 35% in aggregate from three years ago, partly thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing revenues over that time.
Comparing that to the industry, which is predicted to deliver 30% growth in the next 12 months, the company's momentum is weaker, based on recent medium-term annualised revenue results.
In light of this, it's understandable that IReader Technology's P/S sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on to something they believe will continue to trail the wider industry.
What We Can Learn From IReader Technology's P/S?
IReader Technology's P/S has taken a dip along with its share price. 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.
Our examination of IReader Technology confirms that the company's revenue trends over the past three-year years are a key factor in its low price-to-sales ratio, as we suspected, given they fall short of current industry expectations. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. Unless the recent medium-term conditions improve, they will continue to form a barrier for the share price around these levels.
Don't forget that there may be other risks. For instance, we've identified 3 warning signs for IReader Technology (1 is a bit concerning) 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.
iReader科技有限公司(上海證券交易所股票代碼:603533)的股價在上個月大幅回撤了28%,扭轉了近期的穩健表現。過去30天的下跌結束了股東艱難的一年,當時股價下跌了12%。
儘管價格大幅下跌,但iReader Technology目前可能仍在發出看漲信號,其市銷率(或 “市盈率”)爲3.5倍,因爲中國軟件行業幾乎有一半公司的市盈率大於4.5倍,甚至市盈率高於8倍的情況並不少見。但是,市銷率低可能是有原因的,需要進一步調查以確定其是否合理。
iReader 技術的表現如何
對於大多數公司來說,iReader Technology去年實現的收入增長是完全可以接受的。一種可能性是市銷率很低,因爲投資者認爲這種可觀的收入增長在不久的將來實際上可能低於整個行業。如果你喜歡這家公司,你希望情況並非如此,這樣你就有可能在它失寵的時候買入一些股票。
想全面了解公司的收益、收入和現金流嗎?然後,我們關於iReader Technology的免費報告將幫助您了解其歷史表現。收入增長指標告訴我們低市銷率有哪些?
iReader Technology的市銷率對於一家預計增長有限,而且重要的是表現不如行業的公司來說是典型的。
首先回顧一下,我們發現該公司去年的收入成功增長了15%。令人高興的是,總收入也比三年前增長了35%,這在一定程度上要歸功於過去12個月的增長。因此,我們可以首先確認該公司在這段時間內在增加收入方面做得很好。
根據最近的中期年化收入業績,該行業預計將在未來12個月內實現30%的增長,相比之下,該公司的勢頭較弱。
有鑑於此,可以理解的是,iReader Technology的市銷率低於其他多數公司。顯然,許多股東不願意堅持他們認爲將繼續落後於整個行業的東西。
我們可以從iReader Technology的市銷率中學到什麼?
iReader Technology的市銷率與股價一起下跌。有人認爲,在某些行業中,市銷率是衡量價值的較差指標,但它可以是一個有力的商業信心指標。
我們對iReader Technology的審查證實,正如我們所懷疑的那樣,該公司過去三年的收入趨勢是其低市銷售率的關鍵因素,因爲這些趨勢未達到當前的行業預期。在現階段,投資者認爲,收入改善的可能性不足以證明更高的市銷率是合理的。除非最近的中期狀況有所改善,否則它們將繼續構成股價在這些水平附近的障礙。
別忘了可能還有其他風險。例如,我們已經確定了你應該注意的iReader Technology的3個警告信號(其中一個有點令人擔憂)。
重要的是要確保你尋找一家優秀的公司,而不僅僅是你遇到的第一個想法。因此,如果盈利能力的增長與你對一家優秀公司的想法一致,那就來看看這份免費名單吧,列出了最近收益增長強勁(市盈率低)的有趣公司。
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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