Revenues Tell The Story For Skyverse Technology Co., Ltd. (SHSE:688361) As Its Stock Soars 28%

Skyverse Technology Co., Ltd. (SHSE:688361) shares have continued their recent momentum with a 28% gain in the last month alone. The bad news is that even after the stocks recovery in the last 30 days, shareholders are still underwater by about 4.8% over the last year.

Since its price has surged higher, Skyverse Technology may be sending very bearish signals at the moment with a price-to-sales (or "P/S") ratio of 22.9x, since almost half of all companies in the Semiconductor industry in China have P/S ratios under 7.2x and even P/S lower than 3x are not unusual. 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 Skyverse Technology

What Does Skyverse Technology's P/S Mean For Shareholders?

With revenue growth that's superior to most other companies of late, Skyverse Technology has been doing relatively well. It seems that many are expecting the strong revenue performance to persist, which has raised the P/S. However, if this isn't the case, investors might get caught out paying too much for the stock.

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

How Is Skyverse Technology's Revenue Growth Trending?

The only time you'd be truly comfortable seeing a P/S as steep as Skyverse Technology's is when the company's growth is on track to outshine the industry decidedly.

Retrospectively, the last year delivered an exceptional 33% gain to the company's top line. Pleasingly, revenue has also lifted 209% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 61% during the coming year according to the seven analysts following the company. Meanwhile, the rest of the industry is forecast to only expand by 42%, which is noticeably less attractive.

In light of this, it's understandable that Skyverse Technology's P/S sits above the majority of other companies. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

The Key Takeaway

Shares in Skyverse Technology have seen a strong upwards swing lately, which has really helped boost its P/S figure. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

Our look into Skyverse Technology 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.

Don't forget that there may be other risks. For instance, we've identified 3 warning signs for Skyverse Technology (1 can't be ignored) you should be aware of.

If these risks are making you reconsider your opinion on Skyverse Technology, 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.