Not Many Are Piling Into Tangshan Jidong Cement Co.,Ltd. (SZSE:000401) Just Yet

When close to half the companies operating in the Basic Materials industry in China have price-to-sales ratios (or "P/S") above 1x, you may consider Tangshan Jidong Cement Co.,Ltd. (SZSE:000401) as an attractive investment with its 0.4x P/S ratio. 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 Tangshan Jidong CementLtd

What Does Tangshan Jidong CementLtd's Recent Performance Look Like?

Tangshan Jidong CementLtd has been struggling lately as its revenue has declined faster than most other companies. The P/S ratio is probably low because investors think this poor revenue performance isn't going to improve at all. You'd much rather the company improve its revenue performance if you still believe in the business. If not, then existing shareholders will probably struggle to get excited 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 Tangshan Jidong CementLtd.

Is There Any Revenue Growth Forecasted For Tangshan Jidong CementLtd?

There's an inherent assumption that a company should underperform the industry for P/S ratios like Tangshan Jidong CementLtd's to be considered reasonable.

Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 24%. This means it has also seen a slide in revenue over the longer-term as revenue is down 30% in total over the last three years. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

Looking ahead now, revenue is anticipated to climb by 8.9% during the coming year according to the four analysts following the company. With the industry predicted to deliver 9.9% growth , the company is positioned for a comparable revenue result.

In light of this, it's peculiar that Tangshan Jidong CementLtd's P/S sits below the majority of other companies. It may be that most investors are not convinced the company can achieve future growth expectations.

The Bottom Line On Tangshan Jidong CementLtd's P/S

It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

It looks to us like the P/S figures for Tangshan Jidong CementLtd remain low despite growth that is expected to be in line with other companies in the industry. The low P/S could be an indication that the revenue growth estimates are being questioned by the market. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.

Before you take the next step, you should know about the 1 warning sign for Tangshan Jidong CementLtd that we have uncovered.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

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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.

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