Shenzhen Ellassay Fashion Co.,Ltd. (SHSE:603808) Looks Just Right With A 30% Price Jump

Shenzhen Ellassay Fashion Co.,Ltd. (SHSE:603808) shares have continued their recent momentum with a 30% 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 14% over that time.

Even after such a large jump in price, you could still be forgiven for feeling indifferent about Shenzhen Ellassay FashionLtd's P/S ratio of 1.1x, since the median price-to-sales (or "P/S") ratio for the Luxury industry in China is also close to 1.5x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

See our latest analysis for Shenzhen Ellassay FashionLtd

What Does Shenzhen Ellassay FashionLtd's Recent Performance Look Like?

With revenue growth that's superior to most other companies of late, Shenzhen Ellassay FashionLtd has been doing relatively well. It might be that many expect the strong revenue performance to wane, which has kept the P/S ratio from rising. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Shenzhen Ellassay FashionLtd.

Is There Some Revenue Growth Forecasted For Shenzhen Ellassay FashionLtd?

There's an inherent assumption that a company should be matching the industry for P/S ratios like Shenzhen Ellassay FashionLtd's to be considered reasonable.

Retrospectively, the last year delivered a decent 11% gain to the company's revenues. Pleasingly, revenue has also lifted 31% in aggregate from three years ago, partly thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing revenues over that time.

Looking ahead now, revenue is anticipated to climb by 13% during the coming year according to the four analysts following the company. That's shaping up to be similar to the 15% growth forecast for the broader industry.

In light of this, it's understandable that Shenzhen Ellassay FashionLtd's P/S sits in line with the majority of other companies. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

The Bottom Line On Shenzhen Ellassay FashionLtd's P/S

Its shares have lifted substantially and now Shenzhen Ellassay FashionLtd's P/S is back within range of the industry median. 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.

Our look at Shenzhen Ellassay FashionLtd's revenue growth estimates show that its P/S is about what we expect, as both metrics follow closely with the industry averages. At this stage investors feel the potential for an improvement or deterioration in revenue isn't great enough to push P/S in a higher or lower direction. If all things remain constant, the possibility of a drastic share price movement remains fairly remote.

There are also other vital risk factors to consider before investing and we've discovered 1 warning sign for Shenzhen Ellassay FashionLtd that you should be aware of.

If these risks are making you reconsider your opinion on Shenzhen Ellassay FashionLtd, 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.