Investors Still Aren't Entirely Convinced By Jiangsu Yuxing Film Technology Co., Ltd's (SZSE:300305) Revenues Despite 43% Price Jump

Jiangsu Yuxing Film Technology Co., Ltd (SZSE:300305) shareholders would be excited to see that the share price has had a great month, posting a 43% gain and recovering from prior weakness. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 37% in the last twelve months.

Even after such a large jump in price, you could still be forgiven for feeling indifferent about Jiangsu Yuxing Film Technology's P/S ratio of 1.9x, since the median price-to-sales (or "P/S") ratio for the Chemicals industry in China is also close to 2.2x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

See our latest analysis for Jiangsu Yuxing Film Technology

What Does Jiangsu Yuxing Film Technology's P/S Mean For Shareholders?

Jiangsu Yuxing Film Technology could be doing better as its revenue has been going backwards lately while most other companies have been seeing positive revenue growth. It might be that many expect the dour revenue performance to strengthen positively, which has kept the P/S from falling. You'd really hope so, otherwise you're paying a relatively elevated price for a company with this sort of growth profile.

Keen to find out how analysts think Jiangsu Yuxing Film Technology's future stacks up against the industry? In that case, our free report is a great place to start.

Is There Some Revenue Growth Forecasted For Jiangsu Yuxing Film Technology?

There's an inherent assumption that a company should be matching the industry for P/S ratios like Jiangsu Yuxing Film Technology's to be considered reasonable.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 36%. This has erased any of its gains during the last three years, with practically no change in revenue being achieved in total. Therefore, it's fair to say that revenue growth has been inconsistent recently for the company.

Shifting to the future, estimates from the lone analyst covering the company suggest revenue should grow by 53% over the next year. That's shaping up to be materially higher than the 21% growth forecast for the broader industry.

In light of this, it's curious that Jiangsu Yuxing Film Technology's P/S sits in line with the majority of other companies. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.

The Key Takeaway

Its shares have lifted substantially and now Jiangsu Yuxing Film Technology's P/S is back within range of 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.

Despite enticing revenue growth figures that outpace the industry, Jiangsu Yuxing Film Technology's P/S isn't quite what we'd expect. When we see a strong revenue outlook, with growth outpacing the industry, we can only assume potential uncertainty around these figures are what might be placing slight pressure on the P/S ratio. It appears some are indeed anticipating revenue instability, because these conditions should normally provide a boost to the share price.

It is also worth noting that we have found 2 warning signs for Jiangsu Yuxing Film Technology (1 doesn't sit too well with us!) that you need to take into consideration.

If these risks are making you reconsider your opinion on Jiangsu Yuxing Film Technology, 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.