Investors Interested In Yues International Holdings Group Limited's (HKG:1529) Revenues
When you see that almost half of the companies in the Logistics industry in Hong Kong have price-to-sales ratios (or "P/S") below 0.2x, Yues International Holdings Group Limited (HKG:1529) looks to be giving off some sell signals with its 1x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's as high as it is.
View our latest analysis for Yues International Holdings Group
How Yues International Holdings Group Has Been Performing
With revenue growth that's exceedingly strong of late, Yues International Holdings Group has been doing very well. Perhaps the market is expecting future revenue performance to outperform the wider market, which has seemingly got people interested in the stock. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.
Although there are no analyst estimates available for Yues International Holdings Group, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.Is There Enough Revenue Growth Forecasted For Yues International Holdings Group?
In order to justify its P/S ratio, Yues International Holdings Group would need to produce impressive growth in excess of the industry.
Retrospectively, the last year delivered an exceptional 107% gain to the company's top line. The strong recent performance means it was also able to grow revenue by 68% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.
This is in contrast to the rest of the industry, which is expected to grow by 14% over the next year, materially lower than the company's recent medium-term annualised growth rates.
In light of this, it's understandable that Yues International Holdings Group's P/S sits above the majority of other companies. Presumably shareholders aren't keen to offload something they believe will continue to outmanoeuvre the wider industry.
What We Can Learn From Yues International Holdings Group's P/S?
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.
As we suspected, our examination of Yues International Holdings Group revealed its three-year revenue trends are contributing to its high P/S, given they look better than current industry expectations. In the eyes of shareholders, the probability of a continued growth trajectory is great enough to prevent the P/S from pulling back. If recent medium-term revenue trends continue, it's hard to see the share price falling strongly in the near future under these circumstances.
And what about other risks? Every company has them, and we've spotted 3 warning signs for Yues International Holdings Group (of which 2 don't sit too well with us!) you should know about.
If these risks are making you reconsider your opinion on Yues International Holdings Group, explore our interactive list of high quality stocks to get an idea of what else is out there.
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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.