Ningbo Joy Intelligent Logistics Technology Co.,Ltd. (SZSE:301198) Shares Slammed 34% But Getting In Cheap Might Be Difficult Regardless
The Ningbo Joy Intelligent Logistics Technology Co.,Ltd. (SZSE:301198) share price has softened a substantial 34% over the previous 30 days, handing back much of the gains the stock has made lately. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 15% in that time.
Even after such a large drop in price, you could still be forgiven for thinking Ningbo Joy Intelligent Logistics TechnologyLtd is a stock to steer clear of with a price-to-sales ratios (or "P/S") of 5x, considering almost half the companies in China's Packaging industry have P/S ratios below 1.9x. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so lofty.
Check out our latest analysis for Ningbo Joy Intelligent Logistics TechnologyLtd
How Has Ningbo Joy Intelligent Logistics TechnologyLtd Performed Recently?
While the industry has experienced revenue growth lately, Ningbo Joy Intelligent Logistics TechnologyLtd's revenue has gone into reverse gear, which is not great. One possibility is that the P/S ratio is high because investors think this poor revenue performance will turn the corner. If not, then existing shareholders may be extremely nervous about the viability of the share price.
Want the full picture on analyst estimates for the company? Then our free report on Ningbo Joy Intelligent Logistics TechnologyLtd will help you uncover what's on the horizon.What Are Revenue Growth Metrics Telling Us About The High P/S?
Ningbo Joy Intelligent Logistics TechnologyLtd's P/S ratio would be typical for a company that's expected to deliver very strong growth, and importantly, perform much better than the industry.
Retrospectively, the last year delivered a frustrating 20% decrease to the company's top line. The last three years don't look nice either as the company has shrunk revenue by 6.8% in aggregate. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.
Shifting to the future, estimates from the sole analyst covering the company suggest revenue should grow by 41% over the next year. Meanwhile, the rest of the industry is forecast to only expand by 15%, which is noticeably less attractive.
With this information, we can see why Ningbo Joy Intelligent Logistics TechnologyLtd is trading at such a high P/S compared to the industry. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.
What We Can Learn From Ningbo Joy Intelligent Logistics TechnologyLtd's P/S?
A significant share price dive has done very little to deflate Ningbo Joy Intelligent Logistics TechnologyLtd's very lofty P/S. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.
We've established that Ningbo Joy Intelligent Logistics TechnologyLtd maintains its high P/S on the strength of its forecasted revenue growth being higher than the the rest of the Packaging industry, as expected. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. It's hard to see the share price falling strongly in the near future under these circumstances.
Before you take the next step, you should know about the 3 warning signs for Ningbo Joy Intelligent Logistics TechnologyLtd (2 are concerning!) that we have uncovered.
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).
Valuation is complex, but we're here to simplify it.
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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.
About SZSE:301198
Ningbo Joy Intelligent Logistics TechnologyLtd
Ningbo Joy Intelligent Logistics Technology Co.,Ltd.
Reasonable growth potential with adequate balance sheet.