There's No Escaping Jiangxi Black Cat Carbon Black Inc.,Ltd's (SZSE:002068) Muted Revenues Despite A 27% Share Price Rise

Despite an already strong run, Jiangxi Black Cat Carbon Black Inc.,Ltd (SZSE:002068) shares have been powering on, with a gain of 27% in the last thirty days. Looking back a bit further, it's encouraging to see the stock is up 42% in the last year.

In spite of the firm bounce in price, Jiangxi Black Cat Carbon BlackLtd may still be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 1x, since almost half of all companies in the Chemicals industry in China have P/S ratios greater than 2.4x and even P/S higher than 5x are not unusual. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

See our latest analysis for Jiangxi Black Cat Carbon BlackLtd

What Does Jiangxi Black Cat Carbon BlackLtd's Recent Performance Look Like?

Recent times have been advantageous for Jiangxi Black Cat Carbon BlackLtd as its revenues have been rising faster than most other companies. It might be that many expect the strong revenue performance to degrade substantially, which has repressed the share price, and thus the P/S ratio. If not, then existing shareholders have reason to be quite optimistic 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 Jiangxi Black Cat Carbon BlackLtd.

Is There Any Revenue Growth Forecasted For Jiangxi Black Cat Carbon BlackLtd?

The only time you'd be truly comfortable seeing a P/S as low as Jiangxi Black Cat Carbon BlackLtd's is when the company's growth is on track to lag the industry.

Retrospectively, the last year delivered a decent 6.1% gain to the company's revenues. Revenue has also lifted 28% in aggregate from three years ago, partly thanks to the last 12 months of growth. Therefore, it's fair to say the revenue growth recently has been respectable for the company.

Shifting to the future, estimates from the only analyst covering the company suggest revenue should grow by 17% over the next year. Meanwhile, the rest of the industry is forecast to expand by 24%, which is noticeably more attractive.

In light of this, it's understandable that Jiangxi Black Cat Carbon BlackLtd's P/S sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

The Bottom Line On Jiangxi Black Cat Carbon BlackLtd's P/S

Jiangxi Black Cat Carbon BlackLtd's stock price has surged recently, but its but its P/S still remains modest. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

As we suspected, our examination of Jiangxi Black Cat Carbon BlackLtd's analyst forecasts revealed that its inferior revenue outlook is contributing to its low P/S. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

And what about other risks? Every company has them, and we've spotted 1 warning sign for Jiangxi Black Cat Carbon BlackLtd you should know about.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.