Guangdong Dcenti Auto-Parts Stock Limited Company (SHSE:603335) Doing What It Can To Lift Shares

When close to half the companies operating in the Auto Components industry in China have price-to-sales ratios (or "P/S") above 2.4x, you may consider Guangdong Dcenti Auto-Parts Stock Limited Company (SHSE:603335) as an attractive investment with its 1.2x 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 limited.

View our latest analysis for Guangdong Dcenti Auto-Parts Stock Limited

How Has Guangdong Dcenti Auto-Parts Stock Limited Performed Recently?

Guangdong Dcenti Auto-Parts Stock Limited has been doing a decent job lately as it's been growing revenue at a reasonable pace. Perhaps the market believes the recent revenue performance might fall short of industry figures in the near future, leading to a reduced P/S. Those who are bullish on Guangdong Dcenti Auto-Parts Stock Limited will be hoping that this isn't the case, so that they can pick up the stock at a lower valuation.

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 Guangdong Dcenti Auto-Parts Stock Limited's earnings, revenue and cash flow.

How Is Guangdong Dcenti Auto-Parts Stock Limited's Revenue Growth Trending?

The only time you'd be truly comfortable seeing a P/S as low as Guangdong Dcenti Auto-Parts Stock Limited's is when the company's growth is on track to lag the industry.

Retrospectively, the last year delivered a decent 5.2% gain to the company's revenues. The latest three year period has also seen an excellent 88% overall rise in revenue, aided somewhat by its short-term performance. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Weighing that recent medium-term revenue trajectory against the broader industry's one-year forecast for expansion of 26% shows it's about the same on an annualised basis.

With this information, we find it odd that Guangdong Dcenti Auto-Parts Stock Limited is trading at a P/S lower than the industry. It may be that most investors are not convinced the company can maintain recent growth rates.

What Does Guangdong Dcenti Auto-Parts Stock Limited's P/S Mean For Investors?

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.

Our examination of Guangdong Dcenti Auto-Parts Stock Limited revealed its three-year revenue trends looking similar to current industry expectations hasn't given the P/S the boost we expected, given that it's lower than the wider industry P/S, There could be some unobserved threats to revenue preventing the P/S ratio from matching the company's performance. At least the risk of a price drop looks to be subdued if recent medium-term revenue trends continue, but investors seem to think future revenue could see some volatility.

You need to take note of risks, for example - Guangdong Dcenti Auto-Parts Stock Limited has 3 warning signs (and 2 which are a bit unpleasant) we think you should know about.

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).

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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.