Investors Aren't Buying Jiangshan Oupai Door Industry Co., Ltd's (SHSE:603208) Revenues

When you see that almost half of the companies in the Building industry in China have price-to-sales ratios (or "P/S") above 1.8x, Jiangshan Oupai Door Industry Co., Ltd (SHSE:603208) looks to be giving off some buy signals with its 0.9x P/S ratio. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

View our latest analysis for Jiangshan Oupai Door Industry

What Does Jiangshan Oupai Door Industry's Recent Performance Look Like?

While the industry has experienced revenue growth lately, Jiangshan Oupai Door Industry's revenue has gone into reverse gear, which is not great. The P/S ratio is probably low because investors think this poor revenue performance isn't going to get any better. So while you could say the stock is cheap, investors will be looking for improvement before they see it as good value.

Want the full picture on analyst estimates for the company? Then our free report on Jiangshan Oupai Door Industry will help you uncover what's on the horizon.

Is There Any Revenue Growth Forecasted For Jiangshan Oupai Door Industry?

Jiangshan Oupai Door Industry's P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 11%. Unfortunately, that's brought it right back to where it started three years ago with revenue growth being virtually non-existent overall during that time. Therefore, it's fair to say that revenue growth has been inconsistent recently for the company.

Turning to the outlook, the next year should generate growth of 9.5% as estimated by the five analysts watching the company. That's shaping up to be materially lower than the 20% growth forecast for the broader industry.

With this information, we can see why Jiangshan Oupai Door Industry is trading at a P/S lower than the industry. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

The Bottom Line On Jiangshan Oupai Door Industry's P/S

It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

As we suspected, our examination of Jiangshan Oupai Door Industry's analyst forecasts revealed that its inferior revenue outlook is contributing 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. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

There are also other vital risk factors to consider and we've discovered 2 warning signs for Jiangshan Oupai Door Industry (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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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.