Xi'an Peri Power Semiconductor Converting Technology Co.,Ltd.'s (SZSE:300831) 35% Price Boost Is Out Of Tune With Revenues

Those holding Xi'an Peri Power Semiconductor Converting Technology Co.,Ltd. (SZSE:300831) shares would be relieved that the share price has rebounded 35% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 33% in the last twelve months.

Following the firm bounce in price, Xi'an Peri Power Semiconductor Converting TechnologyLtd may be sending very bearish signals at the moment with a price-to-sales (or "P/S") ratio of 28.9x, since almost half of all companies in the Semiconductor industry in China have P/S ratios under 6.5x and even P/S lower than 3x are not unusual. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.

Check out our latest analysis for Xi'an Peri Power Semiconductor Converting TechnologyLtd

What Does Xi'an Peri Power Semiconductor Converting TechnologyLtd's Recent Performance Look Like?

As an illustration, revenue has deteriorated at Xi'an Peri Power Semiconductor Converting TechnologyLtd over the last year, which is not ideal at all. It might be that many expect the company to still outplay most other companies over the coming period, which has kept the P/S from collapsing. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Xi'an Peri Power Semiconductor Converting TechnologyLtd will help you shine a light on its historical performance.

Do Revenue Forecasts Match The High P/S Ratio?

The only time you'd be truly comfortable seeing a P/S as steep as Xi'an Peri Power Semiconductor Converting TechnologyLtd's is when the company's growth is on track to outshine the industry decidedly.

Retrospectively, the last year delivered a frustrating 39% decrease to the company's top line. As a result, revenue from three years ago have also fallen 42% overall. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

Comparing that to the industry, which is predicted to deliver 37% growth in the next 12 months, the company's downward momentum based on recent medium-term revenue results is a sobering picture.

In light of this, it's alarming that Xi'an Peri Power Semiconductor Converting TechnologyLtd's P/S sits above the majority of other companies. It seems most investors are ignoring the recent poor growth rate and are hoping for a turnaround in the company's business prospects. Only the boldest would assume these prices are sustainable as a continuation of recent revenue trends is likely to weigh heavily on the share price eventually.

The Bottom Line On Xi'an Peri Power Semiconductor Converting TechnologyLtd's P/S

Shares in Xi'an Peri Power Semiconductor Converting TechnologyLtd have seen a strong upwards swing lately, which has really helped boost its P/S figure. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

Our examination of Xi'an Peri Power Semiconductor Converting TechnologyLtd revealed its shrinking revenue over the medium-term isn't resulting in a P/S as low as we expected, given the industry is set to grow. Right now we aren't comfortable with the high P/S as this revenue performance is highly unlikely to support such positive sentiment for long. Unless the the circumstances surrounding the recent medium-term improve, it wouldn't be wrong to expect a a difficult period ahead for the company's shareholders.

Plus, you should also learn about these 3 warning signs we've spotted with Xi'an Peri Power Semiconductor Converting TechnologyLtd (including 1 which can't be ignored).

If these risks are making you reconsider your opinion on Xi'an Peri Power Semiconductor Converting TechnologyLtd, 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.