Shandong Yisheng Livestock & Poultry Breeding Co., Ltd. (SZSE:002458) Not Lagging Industry On Growth Or Pricing

When you see that almost half of the companies in the Food industry in China have price-to-sales ratios (or "P/S") below 1.7x, Shandong Yisheng Livestock & Poultry Breeding Co., Ltd. (SZSE:002458) looks to be giving off some sell signals with its 3.6x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's as high as it is.

Check out our latest analysis for Shandong Yisheng Livestock & Poultry Breeding

What Does Shandong Yisheng Livestock & Poultry Breeding's Recent Performance Look Like?

With revenue growth that's superior to most other companies of late, Shandong Yisheng Livestock & Poultry Breeding has been doing relatively well. The P/S is probably high because investors think this strong revenue performance will continue. However, if this isn't the case, investors might get caught out paying too much for the stock.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Shandong Yisheng Livestock & Poultry Breeding.

What Are Revenue Growth Metrics Telling Us About The High P/S?

There's an inherent assumption that a company should outperform the industry for P/S ratios like Shandong Yisheng Livestock & Poultry Breeding's to be considered reasonable.

Taking a look back first, we see that the company grew revenue by an impressive 84% last year. The latest three year period has also seen a 26% overall rise in revenue, aided extensively by its short-term performance. Therefore, it's fair to say the revenue growth recently has been respectable for the company.

Turning to the outlook, the next year should generate growth of 21% as estimated by the nine analysts watching the company. With the industry only predicted to deliver 16%, the company is positioned for a stronger revenue result.

In light of this, it's understandable that Shandong Yisheng Livestock & Poultry Breeding's P/S sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Bottom Line On Shandong Yisheng Livestock & Poultry Breeding's P/S

Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

Our look into Shandong Yisheng Livestock & Poultry Breeding shows that its P/S ratio remains high on the merit of its strong future revenues. At this stage investors feel the potential for a deterioration in revenues is quite remote, justifying the elevated P/S ratio. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

It is also worth noting that we have found 1 warning sign for Shandong Yisheng Livestock & Poultry Breeding that you need to take into consideration.

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.