Stock Analysis

Market Might Still Lack Some Conviction On Hunan Dajiaweikang Pharmaceutical Industry Co.,Ltd (SZSE:301126) Even After 31% Share Price Boost

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Those holding Hunan Dajiaweikang Pharmaceutical Industry Co.,Ltd (SZSE:301126) shares would be relieved that the share price has rebounded 31% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 42% over that time.

Although its price has surged higher, Hunan Dajiaweikang Pharmaceutical IndustryLtd may still be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 0.5x, since almost half of all companies in the Healthcare industry in China have P/S ratios greater than 1.9x and even P/S higher than 4x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

View our latest analysis for Hunan Dajiaweikang Pharmaceutical IndustryLtd

SZSE:301126 Price to Sales Ratio vs Industry March 8th 2024

How Has Hunan Dajiaweikang Pharmaceutical IndustryLtd Performed Recently?

With revenue growth that's exceedingly strong of late, Hunan Dajiaweikang Pharmaceutical IndustryLtd has been doing very well. It might be that many expect the strong revenue performance to degrade substantially, which has repressed the P/S ratio. If that doesn't eventuate, then existing shareholders have reason to be quite optimistic about the future direction of the share price.

Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Hunan Dajiaweikang Pharmaceutical IndustryLtd will help you shine a light on its historical performance.

How Is Hunan Dajiaweikang Pharmaceutical IndustryLtd's Revenue Growth Trending?

Hunan Dajiaweikang Pharmaceutical IndustryLtd's P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.

Retrospectively, the last year delivered an exceptional 30% gain to the company's top line. The latest three year period has also seen an excellent 64% overall rise in revenue, aided by its short-term performance. So we can start by confirming that the company has done a great job of growing revenue over that time.

Comparing that to the industry, which is predicted to deliver 18% growth in the next 12 months, the company's momentum is pretty similar based on recent medium-term annualised revenue results.

With this in consideration, we find it intriguing that Hunan Dajiaweikang Pharmaceutical IndustryLtd's P/S falls short of its industry peers. It may be that most investors are not convinced the company can maintain recent growth rates.

The Bottom Line On Hunan Dajiaweikang Pharmaceutical IndustryLtd's P/S

The latest share price surge wasn't enough to lift Hunan Dajiaweikang Pharmaceutical IndustryLtd's P/S close to the industry median. 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 examination of Hunan Dajiaweikang Pharmaceutical IndustryLtd revealed its three-year revenue trends looking similar to current industry expectations hasn't given the P/S the boost we expected, given that it's lower than the wider industry P/S, When we see industry-like revenue growth but a lower than expected P/S, we assume potential risks are what might be placing downward pressure on the share price. medium-term

It's always necessary to consider the ever-present spectre of investment risk. We've identified 5 warning signs with Hunan Dajiaweikang Pharmaceutical IndustryLtd (at least 3 which don't sit too well with us), and understanding them should be part of your investment process.

Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

Valuation is complex, but we're helping make it simple.

Find out whether Hunan Dajiaweikang Pharmaceutical IndustryLtd is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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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.