Baosheng Science and Technology Innovation Co.,Ltd.'s (SHSE:600973) Business And Shares Still Trailing The Industry

With a price-to-sales (or "P/S") ratio of 0.1x Baosheng Science and Technology Innovation Co.,Ltd. (SHSE:600973) may be sending very bullish signals at the moment, given that almost half of all the Electrical companies in China have P/S ratios greater than 2.4x 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 so limited.

See our latest analysis for Baosheng Science and Technology InnovationLtd

What Does Baosheng Science and Technology InnovationLtd's P/S Mean For Shareholders?

Recent revenue growth for Baosheng Science and Technology InnovationLtd has been in line with the industry. It might be that many expect the mediocre revenue performance to degrade, which has repressed the P/S ratio. If you like the company, you'd be hoping this isn't the case so that you could pick up some stock while it's out of favour.

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Is There Any Revenue Growth Forecasted For Baosheng Science and Technology InnovationLtd?

In order to justify its P/S ratio, Baosheng Science and Technology InnovationLtd would need to produce anemic growth that's substantially trailing the industry.

Taking a look back first, we see that there was hardly any revenue growth to speak of for the company over the past year. Regardless, revenue has managed to lift by a handy 12% in aggregate from three years ago, thanks to the earlier period of growth. Accordingly, shareholders probably wouldn't have been overly satisfied with the unstable medium-term growth rates.

Looking ahead now, revenue is anticipated to climb by 7.2% during the coming year according to the dual analysts following the company. That's shaping up to be materially lower than the 23% growth forecast for the broader industry.

With this in consideration, its clear as to why Baosheng Science and Technology InnovationLtd's P/S is falling short industry peers. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.

What Does Baosheng Science and Technology InnovationLtd'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.

As expected, our analysis of Baosheng Science and Technology InnovationLtd's analyst forecasts confirms that the company's underwhelming revenue outlook is a major contributor to its low P/S. Shareholders' pessimism on the revenue prospects for the company seems to be the main contributor to the depressed P/S. The company will need a change of fortune to justify the P/S rising higher in the future.

Don't forget that there may be other risks. For instance, we've identified 1 warning sign for Baosheng Science and Technology InnovationLtd that you should be aware of.

If these risks are making you reconsider your opinion on Baosheng Science and Technology InnovationLtd, 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.