Wuxi Taiji Industry Limited Corporation (SHSE:600667) Doing What It Can To Lift Shares

With a price-to-sales (or "P/S") ratio of 0.3x Wuxi Taiji Industry Limited Corporation (SHSE:600667) may be sending very bullish signals at the moment, given that almost half of all the Semiconductor companies in China have P/S ratios greater than 5.4x and even P/S higher than 10x are not unusual. However, the P/S might be quite low for a reason and it requires further investigation to determine if it's justified.

See our latest analysis for Wuxi Taiji Industry Limited

How Wuxi Taiji Industry Limited Has Been Performing

Wuxi Taiji Industry Limited could be doing better as it's been growing revenue less than most other companies lately. The P/S ratio is probably low because investors think this lacklustre revenue performance isn't going to get any better. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Wuxi Taiji Industry Limited.

Is There Any Revenue Growth Forecasted For Wuxi Taiji Industry Limited?

There's an inherent assumption that a company should far underperform the industry for P/S ratios like Wuxi Taiji Industry Limited's to be considered reasonable.

Taking a look back first, we see that there was hardly any revenue growth to speak of for the company over the past year. Still, the latest three year period has seen an excellent 103% overall rise in revenue, in spite of its uninspiring short-term performance. Accordingly, shareholders will be pleased, but also have some questions to ponder about the last 12 months.

Looking ahead now, revenue is anticipated to climb by 35% during the coming year according to the lone analyst following the company. That's shaping up to be similar to the 35% growth forecast for the broader industry.

With this in consideration, we find it intriguing that Wuxi Taiji Industry Limited's P/S is lagging behind its industry peers. Apparently some shareholders are doubtful of the forecasts and have been accepting lower selling prices.

The Key Takeaway

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.

It looks to us like the P/S figures for Wuxi Taiji Industry Limited remain low despite growth that is expected to be in line with other companies in the industry. Despite average revenue growth estimates, there could be some unobserved threats keeping the P/S low. It appears some are indeed anticipating revenue instability, because these conditions should normally provide more support to the share price.

And what about other risks? Every company has them, and we've spotted 1 warning sign for Wuxi Taiji Industry Limited you should know about.

If these risks are making you reconsider your opinion on Wuxi Taiji Industry Limited, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.