Risks Still Elevated At These Prices As Hunan TV & Broadcast Intermediary Co., Ltd. (SZSE:000917) Shares Dive 29%

The Hunan TV & Broadcast Intermediary Co., Ltd. (SZSE:000917) share price has softened a substantial 29% 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 13% in that time.

Although its price has dipped substantially, there still wouldn't be many who think Hunan TV & Broadcast Intermediary's price-to-sales (or "P/S") ratio of 2x is worth a mention when the median P/S in China's Media industry is similar at about 2.4x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

See our latest analysis for Hunan TV & Broadcast Intermediary

What Does Hunan TV & Broadcast Intermediary's Recent Performance Look Like?

Hunan TV & Broadcast Intermediary could be doing better as its revenue has been going backwards lately while most other companies have been seeing positive revenue growth. One possibility is that the P/S ratio is moderate because investors think this poor revenue performance will turn around. You'd really hope so, otherwise you're paying a relatively elevated price for a company with this sort of growth profile.

Want the full picture on analyst estimates for the company? Then our free report on Hunan TV & Broadcast Intermediary will help you uncover what's on the horizon.

How Is Hunan TV & Broadcast Intermediary's Revenue Growth Trending?

In order to justify its P/S ratio, Hunan TV & Broadcast Intermediary would need to produce growth that's similar to the industry.

Taking a look back first, we see that there was hardly any revenue growth to speak of for the company over the past year. Whilst it's an improvement, it wasn't enough to get the company out of the hole it was in, with revenue down 39% overall from three years ago. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.

Looking ahead now, revenue is anticipated to climb by 13% during the coming year according to the two analysts following the company. Meanwhile, the rest of the industry is forecast to expand by 20%, which is noticeably more attractive.

With this in mind, we find it intriguing that Hunan TV & Broadcast Intermediary's P/S is closely matching its industry peers. It seems most investors are ignoring the fairly limited growth expectations and are willing to pay up for exposure to the stock. Maintaining these prices will be difficult to achieve as this level of revenue growth is likely to weigh down the shares eventually.

What Does Hunan TV & Broadcast Intermediary's P/S Mean For Investors?

Hunan TV & Broadcast Intermediary's plummeting stock price has brought its P/S back to a similar region as the rest of the industry. 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.

Our look at the analysts forecasts of Hunan TV & Broadcast Intermediary's revenue prospects has shown that its inferior revenue outlook isn't negatively impacting its P/S as much as we would have predicted. When we see companies with a relatively weaker revenue outlook compared to the industry, we suspect the share price is at risk of declining, sending the moderate P/S lower. Circumstances like this present a risk to current and prospective investors who may see share prices fall if the low revenue growth impacts the sentiment.

The company's balance sheet is another key area for risk analysis. Take a look at our free balance sheet analysis for Hunan TV & Broadcast Intermediary with six simple checks on some of these key factors.

If you're unsure about the strength of Hunan TV & Broadcast Intermediary's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.