BAIC BluePark New Energy Technology Co.,Ltd.'s (SHSE:600733) P/S Is Still On The Mark Following 28% Share Price Bounce

Those holding BAIC BluePark New Energy Technology Co.,Ltd. (SHSE:600733) shares would be relieved that the share price has rebounded 28% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. But the gains over the last month weren't enough to make shareholders whole, as the share price is still down 7.0% in the last twelve months.

Since its price has surged higher, when almost half of the companies in China's Auto industry have price-to-sales ratios (or "P/S") below 1.6x, you may consider BAIC BluePark New Energy TechnologyLtd as a stock probably not worth researching with its 2.5x 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.

See our latest analysis for BAIC BluePark New Energy TechnologyLtd

What Does BAIC BluePark New Energy TechnologyLtd's P/S Mean For Shareholders?

With revenue growth that's superior to most other companies of late, BAIC BluePark New Energy TechnologyLtd has been doing relatively well. The P/S is probably high because investors think this strong revenue performance will continue. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on BAIC BluePark New Energy TechnologyLtd.

How Is BAIC BluePark New Energy TechnologyLtd's Revenue Growth Trending?

In order to justify its P/S ratio, BAIC BluePark New Energy TechnologyLtd would need to produce impressive growth in excess of the industry.

Taking a look back first, we see that the company grew revenue by an impressive 58% last year. Pleasingly, revenue has also lifted 37% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 99% during the coming year according to the two analysts following the company. That's shaping up to be materially higher than the 63% growth forecast for the broader industry.

With this in mind, it's not hard to understand why BAIC BluePark New Energy TechnologyLtd's P/S is high relative to its industry peers. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Final Word

BAIC BluePark New Energy TechnologyLtd's P/S is on the rise since its shares have risen strongly. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

As we suspected, our examination of BAIC BluePark New Energy TechnologyLtd's analyst forecasts revealed that its superior revenue outlook is contributing to its high P/S. At this stage investors feel the potential for a deterioration in revenues is quite remote, justifying the elevated P/S ratio. Unless these conditions change, they will continue to provide strong support to the share price.

It is also worth noting that we have found 3 warning signs for BAIC BluePark New Energy TechnologyLtd (1 is a bit concerning!) that you need to take into consideration.

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.

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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.