Stock Analysis

Revenues Tell The Story For Beijing Enlight Media Co., Ltd. (SZSE:300251) As Its Stock Soars 34%

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SZSE:300251

Beijing Enlight Media Co., Ltd. (SZSE:300251) shareholders would be excited to see that the share price has had a great month, posting a 34% gain and recovering from prior weakness. The last 30 days bring the annual gain to a very sharp 48%.

Following the firm bounce in price, when almost half of the companies in China's Entertainment industry have price-to-sales ratios (or "P/S") below 6.5x, you may consider Beijing Enlight Media as a stock not worth researching with its 16.3x P/S ratio. 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.

See our latest analysis for Beijing Enlight Media

SZSE:300251 Price to Sales Ratio vs Industry February 5th 2025

What Does Beijing Enlight Media's P/S Mean For Shareholders?

Recent times have been advantageous for Beijing Enlight Media as its revenues have been rising faster than most other companies. It seems the market expects this form will continue into the future, hence the elevated P/S ratio. However, if this isn't the case, investors might get caught out paying too much for the stock.

Want the full picture on analyst estimates for the company? Then our free report on Beijing Enlight Media will help you uncover what's on the horizon.

How Is Beijing Enlight Media's Revenue Growth Trending?

There's an inherent assumption that a company should far outperform the industry for P/S ratios like Beijing Enlight Media's to be considered reasonable.

Taking a look back first, we see that the company grew revenue by an impressive 103% last year. Revenue has also lifted 24% in aggregate from three years ago, mostly 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 nine analysts covering the company suggest revenue should grow by 29% over the next year. That's shaping up to be materially higher than the 23% growth forecast for the broader industry.

In light of this, it's understandable that Beijing Enlight Media's P/S sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Key Takeaway

Beijing Enlight Media's P/S has grown nicely over the last month thanks to a handy boost in the share price. 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.

Our look into Beijing Enlight Media 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. It's hard to see the share price falling strongly in the near future under these circumstances.

It's always necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Beijing Enlight Media, and understanding should be part of your investment process.

If you're unsure about the strength of Beijing Enlight Media's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

Valuation is complex, but we're here to simplify it.

Discover if Beijing Enlight Media might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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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.