Investors Aren't Entirely Convinced By Wens Foodstuff Group Co., Ltd.'s (SZSE:300498) Revenues

With a median price-to-sales (or "P/S") ratio of close to 1.6x in the Food industry in China, you could be forgiven for feeling indifferent about Wens Foodstuff Group Co., Ltd.'s (SZSE:300498) P/S ratio, which comes in at about the same. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

Check out our latest analysis for Wens Foodstuff Group

How Has Wens Foodstuff Group Performed Recently?

Recent revenue growth for Wens Foodstuff Group has been in line with the industry. It seems that many are expecting the mediocre revenue performance to persist, which has held the P/S ratio back. If this is the case, then at least existing shareholders won't be losing sleep over the current share price.

Want the full picture on analyst estimates for the company? Then our free report on Wens Foodstuff Group will help you uncover what's on the horizon.

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

Wens Foodstuff Group's P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.

Retrospectively, the last year delivered a decent 3.0% gain to the company's revenues. The solid recent performance means it was also able to grow revenue by 24% 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.

Looking ahead now, revenue is anticipated to climb by 23% during the coming year according to the analysts following the company. That's shaping up to be materially higher than the 18% growth forecast for the broader industry.

In light of this, it's curious that Wens Foodstuff Group's P/S sits in line with the majority of other companies. It may be that most investors aren't convinced the company can achieve future growth expectations.

What Does Wens Foodstuff Group's P/S Mean For Investors?

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.

Despite enticing revenue growth figures that outpace the industry, Wens Foodstuff Group's P/S isn't quite what we'd expect. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. However, if you agree with the analysts' forecasts, you may be able to pick up the stock at an attractive price.

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

If these risks are making you reconsider your opinion on Wens Foodstuff Group, 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.