TUS ENVIRONMENTAL SCIENCE AND TECHNOLOGY DEVELOPMENT Co., LTD. (SZSE:000826) Stock Catapults 26% Though Its Price And Business Still Lag The Industry

TUS ENVIRONMENTAL SCIENCE AND TECHNOLOGY DEVELOPMENT Co., LTD. (SZSE:000826) shares have continued their recent momentum with a 26% gain in the last month alone. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 16% in the last twelve months.

Even after such a large jump in price, TUS ENVIRONMENTAL SCIENCE AND TECHNOLOGY DEVELOPMENT may still look like a strong buying opportunity at present with its price-to-sales (or "P/S") ratio of 0.7x, considering almost half of all companies in the Commercial Services 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 quite low for a reason and it requires further investigation to determine if it's justified.

See our latest analysis for TUS ENVIRONMENTAL SCIENCE AND TECHNOLOGY DEVELOPMENT

How TUS ENVIRONMENTAL SCIENCE AND TECHNOLOGY DEVELOPMENT Has Been Performing

For instance, TUS ENVIRONMENTAL SCIENCE AND TECHNOLOGY DEVELOPMENT's receding revenue in recent times would have to be some food for thought. Perhaps the market believes the recent revenue performance isn't good enough to keep up the industry, causing the P/S ratio to suffer. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on TUS ENVIRONMENTAL SCIENCE AND TECHNOLOGY DEVELOPMENT's earnings, revenue and cash flow.

Is There Any Revenue Growth Forecasted For TUS ENVIRONMENTAL SCIENCE AND TECHNOLOGY DEVELOPMENT?

There's an inherent assumption that a company should far underperform the industry for P/S ratios like TUS ENVIRONMENTAL SCIENCE AND TECHNOLOGY DEVELOPMENT's to be considered reasonable.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 5.6%. The last three years don't look nice either as the company has shrunk revenue by 35% in aggregate. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.

In contrast to the company, the rest of the industry is expected to grow by 35% over the next year, which really puts the company's recent medium-term revenue decline into perspective.

In light of this, it's understandable that TUS ENVIRONMENTAL SCIENCE AND TECHNOLOGY DEVELOPMENT's P/S would sit below the majority of other companies. Nonetheless, there's no guarantee the P/S has reached a floor yet with revenue going in reverse. There's potential for the P/S to fall to even lower levels if the company doesn't improve its top-line growth.

What Does TUS ENVIRONMENTAL SCIENCE AND TECHNOLOGY DEVELOPMENT's P/S Mean For Investors?

Shares in TUS ENVIRONMENTAL SCIENCE AND TECHNOLOGY DEVELOPMENT have risen appreciably however, its P/S is still subdued. 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.

It's no surprise that TUS ENVIRONMENTAL SCIENCE AND TECHNOLOGY DEVELOPMENT maintains its low P/S off the back of its sliding revenue over the medium-term. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. If recent medium-term revenue trends continue, it's hard to see the share price moving strongly in either direction in the near future under these circumstances.

Having said that, be aware TUS ENVIRONMENTAL SCIENCE AND TECHNOLOGY DEVELOPMENT is showing 2 warning signs in our investment analysis, and 1 of those is significant.

If these risks are making you reconsider your opinion on TUS ENVIRONMENTAL SCIENCE AND TECHNOLOGY DEVELOPMENT, 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.