A Piece Of The Puzzle Missing From Meinian Onehealth Healthcare Holdings Co., Ltd.'s (SZSE:002044) 31% Share Price Climb

Despite an already strong run, Meinian Onehealth Healthcare Holdings Co., Ltd. (SZSE:002044) shares have been powering on, with a gain of 31% in the last thirty days. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 17% over that time.

Although its price has surged higher, there still wouldn't be many who think Meinian Onehealth Healthcare Holdings' price-to-sales (or "P/S") ratio of 1.9x is worth a mention when the median P/S in China's Healthcare industry is similar at about 1.8x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

See our latest analysis for Meinian Onehealth Healthcare Holdings

How Meinian Onehealth Healthcare Holdings Has Been Performing

With revenue growth that's superior to most other companies of late, Meinian Onehealth Healthcare Holdings 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 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 not quite in favour.

Keen to find out how analysts think Meinian Onehealth Healthcare Holdings' future stacks up against the industry? In that case, our free report is a great place to start.

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

There's an inherent assumption that a company should be matching the industry for P/S ratios like Meinian Onehealth Healthcare Holdings' to be considered reasonable.

If we review the last year of revenue growth, the company posted a worthy increase of 6.3%. The solid recent performance means it was also able to grow revenue by 16% in total over the last three years. Accordingly, shareholders would have probably been satisfied with the medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 16% during the coming year according to the five analysts following the company. Meanwhile, the rest of the industry is forecast to only expand by 14%, which is noticeably less attractive.

In light of this, it's curious that Meinian Onehealth Healthcare Holdings' 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.

The Bottom Line On Meinian Onehealth Healthcare Holdings' P/S

Meinian Onehealth Healthcare Holdings appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry 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.

Looking at Meinian Onehealth Healthcare Holdings' analyst forecasts revealed that its superior revenue outlook isn't giving the boost to its P/S that we would've expected. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. This uncertainty seems to be reflected in the share price which, while stable, could be higher given the revenue forecasts.

Many other vital risk factors can be found on the company's balance sheet. Take a look at our free balance sheet analysis for Meinian Onehealth Healthcare Holdings with six simple checks on some of these key factors.

If these risks are making you reconsider your opinion on Meinian Onehealth Healthcare Holdings, 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.