Beijing Jingwei Hirain Technologies Co., Inc. (SHSE:688326) Stock Rockets 30% But Many Are Still Ignoring The Company

Beijing Jingwei Hirain Technologies Co., Inc. (SHSE:688326) shares have had a really impressive month, gaining 30% after a shaky period beforehand. The last 30 days bring the annual gain to a very sharp 45%.

Although its price has surged higher, Beijing Jingwei Hirain Technologies may still be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 2.2x, since almost half of all companies in the Auto Components industry in China have P/S ratios greater than 2.8x and even P/S higher than 5x are not unusual. 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 Beijing Jingwei Hirain Technologies

How Beijing Jingwei Hirain Technologies Has Been Performing

With revenue growth that's superior to most other companies of late, Beijing Jingwei Hirain Technologies has been doing relatively well. One possibility is that the P/S ratio is low because investors think this strong revenue performance might be less impressive moving forward. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.

Want the full picture on analyst estimates for the company? Then our free report on Beijing Jingwei Hirain Technologies will help you uncover what's on the horizon.

Is There Any Revenue Growth Forecasted For Beijing Jingwei Hirain Technologies?

There's an inherent assumption that a company should underperform the industry for P/S ratios like Beijing Jingwei Hirain Technologies' to be considered reasonable.

Taking a look back first, we see that the company grew revenue by an impressive 18% last year. The latest three year period has also seen an excellent 70% overall rise in revenue, aided by its short-term performance. So we can start by confirming that the company has done a great job of growing revenue over that time.

Turning to the outlook, the next year should generate growth of 24% as estimated by the six analysts watching the company. With the industry predicted to deliver 25% growth , the company is positioned for a comparable revenue result.

In light of this, it's peculiar that Beijing Jingwei Hirain Technologies' P/S sits below the majority of other companies. It may be that most investors are not convinced the company can achieve future growth expectations.

The Final Word

The latest share price surge wasn't enough to lift Beijing Jingwei Hirain Technologies' P/S close to the industry median. 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.

It looks to us like the P/S figures for Beijing Jingwei Hirain Technologies remain low despite growth that is expected to be in line with other companies in the industry. Despite average revenue growth estimates, there could be some unobserved threats keeping the P/S low. It appears some are indeed anticipating revenue instability, because these conditions should normally provide more support to the share price.

You always need to take note of risks, for example - Beijing Jingwei Hirain Technologies has 1 warning sign we think you should be aware of.

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.