Beijing Jingpin Tezhuang Technology Co.,Ltd. (SHSE:688084) Shares Slammed 29% But Getting In Cheap Might Be Difficult Regardless

Beijing Jingpin Tezhuang Technology Co.,Ltd. (SHSE:688084) shares have retraced a considerable 29% in the last month, reversing a fair amount of their solid recent performance. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 30% in that time.

Even after such a large drop in price, Beijing Jingpin Tezhuang TechnologyLtd's price-to-sales (or "P/S") ratio of 18x might still make it look like a strong sell right now compared to other companies in the Aerospace & Defense industry in China, where around half of the companies have P/S ratios below 8.2x and even P/S below 4x are quite common. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.

Check out our latest analysis for Beijing Jingpin Tezhuang TechnologyLtd

How Beijing Jingpin Tezhuang TechnologyLtd Has Been Performing

Recent times have been pleasing for Beijing Jingpin Tezhuang TechnologyLtd as its revenue has risen in spite of the industry's average revenue going into reverse. It seems that many are expecting the company to continue defying the broader industry adversity, which has increased investors’ willingness to pay up for the stock. However, if this isn't the case, investors might get caught out paying too much for the stock.

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

How Is Beijing Jingpin Tezhuang TechnologyLtd's Revenue Growth Trending?

Beijing Jingpin Tezhuang TechnologyLtd's P/S ratio would be typical for a company that's expected to deliver very strong growth, and importantly, perform much better than the industry.

Retrospectively, the last year delivered a decent 14% gain to the company's revenues. Ultimately though, it couldn't turn around the poor performance of the prior period, with revenue shrinking 50% in total over the last three years. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 177% during the coming year according to the only analyst following the company. With the industry only predicted to deliver 55%, the company is positioned for a stronger revenue result.

With this in mind, it's not hard to understand why Beijing Jingpin Tezhuang TechnologyLtd's P/S is high relative to its industry peers. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Bottom Line On Beijing Jingpin Tezhuang TechnologyLtd's P/S

A significant share price dive has done very little to deflate Beijing Jingpin Tezhuang TechnologyLtd's very lofty P/S. 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 we suspected, our examination of Beijing Jingpin Tezhuang TechnologyLtd's analyst forecasts revealed that its superior revenue outlook is contributing to its high P/S. At this stage investors feel the potential for a deterioration in revenues is quite remote, justifying the elevated P/S ratio. Unless these conditions change, they will continue to provide strong support to the share price.

Don't forget that there may be other risks. For instance, we've identified 3 warning signs for Beijing Jingpin Tezhuang TechnologyLtd (2 are potentially serious) you should be aware of.

If you're unsure about the strength of Beijing Jingpin Tezhuang TechnologyLtd's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.