Hangzhou Youngsun Intelligent Equipment Co., Ltd. (SHSE:603901) Stock Rockets 33% But Many Are Still Ignoring The Company

Hangzhou Youngsun Intelligent Equipment Co., Ltd. (SHSE:603901) shares have continued their recent momentum with a 33% gain in the last month alone. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 27% over that time.

Even after such a large jump in price, Hangzhou Youngsun Intelligent Equipment may still be sending buy signals at present with its price-to-sales (or "P/S") ratio of 1.3x, considering almost half of all companies in the Machinery industry in China have P/S ratios greater than 3.1x and even P/S higher than 6x aren't out of the ordinary. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

See our latest analysis for Hangzhou Youngsun Intelligent Equipment

What Does Hangzhou Youngsun Intelligent Equipment's P/S Mean For Shareholders?

There hasn't been much to differentiate Hangzhou Youngsun Intelligent Equipment's and the industry's revenue growth lately. One possibility is that the P/S ratio is low because investors think this modest revenue performance may begin to slide. Those who are bullish on Hangzhou Youngsun Intelligent Equipment will be hoping that this isn't the case.

Want the full picture on analyst estimates for the company? Then our free report on Hangzhou Youngsun Intelligent Equipment will help you uncover what's on the horizon.

How Is Hangzhou Youngsun Intelligent Equipment's Revenue Growth Trending?

There's an inherent assumption that a company should underperform the industry for P/S ratios like Hangzhou Youngsun Intelligent Equipment's to be considered reasonable.

Retrospectively, the last year delivered a decent 7.6% gain to the company's revenues. The solid recent performance means it was also able to grow revenue by 22% in total over the last three years. So we can start by confirming that the company has actually done a good job of growing revenue over that time.

Turning to the outlook, the next year should generate growth of 25% as estimated by the sole analyst watching the company. That's shaping up to be similar to the 24% growth forecast for the broader industry.

In light of this, it's peculiar that Hangzhou Youngsun Intelligent Equipment'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 Does Hangzhou Youngsun Intelligent Equipment's P/S Mean For Investors?

Hangzhou Youngsun Intelligent Equipment's stock price has surged recently, but its but its P/S still remains modest. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

Our examination of Hangzhou Youngsun Intelligent Equipment's revealed that its P/S remains low despite analyst forecasts of revenue growth matching the wider industry. Despite average revenue growth estimates, there could be some unobserved threats keeping the P/S low. However, if you agree with the analysts' forecasts, you may be able to pick up the stock at an attractive price.

Having said that, be aware Hangzhou Youngsun Intelligent Equipment is showing 2 warning signs in our investment analysis, you should know about.

It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).

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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.