A Piece Of The Puzzle Missing From Boji Medical Technology Co.,Ltd.'s (SZSE:300404) 39% Share Price Climb

The Boji Medical Technology Co.,Ltd. (SZSE:300404) share price has done very well over the last month, posting an excellent gain of 39%. Notwithstanding the latest gain, the annual share price return of 9.4% isn't as impressive.

Even after such a large jump in price, there still wouldn't be many who think Boji Medical TechnologyLtd's price-to-sales (or "P/S") ratio of 5.7x is worth a mention when the median P/S in China's Life Sciences industry is similar at about 5.1x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

Check out our latest analysis for Boji Medical TechnologyLtd

How Has Boji Medical TechnologyLtd Performed Recently?

Recent times have been pleasing for Boji Medical TechnologyLtd as its revenue has risen in spite of the industry's average revenue going into reverse. It might be that many expect the strong revenue performance to deteriorate like the rest, which has kept the P/S ratio from rising. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

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

How Is Boji Medical TechnologyLtd's Revenue Growth Trending?

In order to justify its P/S ratio, Boji Medical TechnologyLtd would need to produce growth that's similar to the industry.

If we review the last year of revenue growth, the company posted a terrific increase of 38%. The strong recent performance means it was also able to grow revenue by 145% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 27% during the coming year according to the dual analysts following the company. With the industry only predicted to deliver 16%, the company is positioned for a stronger revenue result.

In light of this, it's curious that Boji Medical TechnologyLtd's P/S sits in line with the majority of other companies. It may be that most investors aren't convinced the company can achieve future growth expectations.

What Does Boji Medical TechnologyLtd's P/S Mean For Investors?

Boji Medical TechnologyLtd appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry 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.

Despite enticing revenue growth figures that outpace the industry, Boji Medical TechnologyLtd's P/S isn't quite what we'd expect. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. This uncertainty seems to be reflected in the share price which, while stable, could be higher given the revenue forecasts.

It's always necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Boji Medical TechnologyLtd, and understanding them should be part of your investment process.

Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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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.