Investors Aren't Entirely Convinced By China Aluminum International Engineering Corporation Limited's (SHSE:601068) Revenues

You may think that with a price-to-sales (or "P/S") ratio of 0.5x China Aluminum International Engineering Corporation Limited (SHSE:601068) is a stock worth checking out, seeing as almost half of all the Construction companies in China have P/S ratios greater than 1.4x and even P/S higher than 4x aren't out of the ordinary. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

Check out our latest analysis for China Aluminum International Engineering

What Does China Aluminum International Engineering's Recent Performance Look Like?

With its revenue growth in positive territory compared to the declining revenue of most other companies, China Aluminum International Engineering has been doing quite well of late. It might be that many expect the strong revenue performance to degrade substantially, possibly more than the industry, which has repressed the P/S. Those who are bullish on China Aluminum International Engineering will be hoping that this isn't the case and the company continues to beat out the industry.

Keen to find out how analysts think China Aluminum International Engineering's future stacks up against the industry? In that case, our free report is a great place to start.

How Is China Aluminum International Engineering's Revenue Growth Trending?

The only time you'd be truly comfortable seeing a P/S as low as China Aluminum International Engineering's is when the company's growth is on track to lag the industry.

If we review the last year of revenue growth, the company posted a worthy increase of 4.5%. However, due to its less than impressive performance prior to this period, revenue growth is practically non-existent over the last three years overall. Therefore, it's fair to say that revenue growth has been inconsistent recently for the company.

Shifting to the future, estimates from the sole analyst covering the company suggest revenue should grow by 10% over the next year. That's shaping up to be similar to the 12% growth forecast for the broader industry.

In light of this, it's peculiar that China Aluminum International Engineering's 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.

What We Can Learn From China Aluminum International Engineering's P/S?

Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

It looks to us like the P/S figures for China Aluminum International Engineering remain low despite growth that is expected to be in line with other companies in the industry. When we see middle-of-the-road revenue growth like this, we assume it must be the potential risks that are what is placing pressure on the P/S ratio. However, if you agree with the analysts' forecasts, you may be able to pick up the stock at an attractive price.

It is also worth noting that we have found 1 warning sign for China Aluminum International Engineering that you need to take into consideration.

If these risks are making you reconsider your opinion on China Aluminum International Engineering, 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.