Revenues Tell The Story For Jiangsu Kuangshun Photosensitivity New-Material Stock Co., Ltd. (SZSE:300537) As Its Stock Soars 47%

The Jiangsu Kuangshun Photosensitivity New-Material Stock Co., Ltd. (SZSE:300537) share price has done very well over the last month, posting an excellent gain of 47%. Notwithstanding the latest gain, the annual share price return of 6.0% isn't as impressive.

Since its price has surged higher, you could be forgiven for thinking Jiangsu Kuangshun Photosensitivity New-Material Stock is a stock to steer clear of with a price-to-sales ratios (or "P/S") of 8.4x, considering almost half the companies in China's Chemicals industry have P/S ratios below 2.2x. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.

View our latest analysis for Jiangsu Kuangshun Photosensitivity New-Material Stock

How Has Jiangsu Kuangshun Photosensitivity New-Material Stock Performed Recently?

Recent times have been advantageous for Jiangsu Kuangshun Photosensitivity New-Material Stock as its revenues have been rising faster than most other companies. The P/S is probably high because investors think this strong revenue performance will continue. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

Want the full picture on analyst estimates for the company? Then our free report on Jiangsu Kuangshun Photosensitivity New-Material Stock will help you uncover what's on the horizon.

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

The only time you'd be truly comfortable seeing a P/S as steep as Jiangsu Kuangshun Photosensitivity New-Material Stock's is when the company's growth is on track to outshine the industry decidedly.

Retrospectively, the last year delivered an exceptional 17% gain to the company's top line. Despite this strong recent growth, it's still struggling to catch up as its three-year revenue frustratingly shrank by 33% overall. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 35% during the coming year according to the dual analysts following the company. With the industry only predicted to deliver 21%, the company is positioned for a stronger revenue result.

With this information, we can see why Jiangsu Kuangshun Photosensitivity New-Material Stock is trading at such a high P/S compared to the industry. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

The Final Word

Jiangsu Kuangshun Photosensitivity New-Material Stock's P/S has grown nicely over the last month thanks to a handy boost in the share price. 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.

Our look into Jiangsu Kuangshun Photosensitivity New-Material Stock shows that its P/S ratio remains high on the merit of its strong future revenues. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

Don't forget that there may be other risks. For instance, we've identified 3 warning signs for Jiangsu Kuangshun Photosensitivity New-Material Stock that you should be aware of.

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.