It's Down 28% But Shanghai Golden Bridge InfoTech Co.,Ltd (SHSE:603918) Could Be Riskier Than It Looks

Shanghai Golden Bridge InfoTech Co.,Ltd (SHSE:603918) shareholders won't be pleased to see that the share price has had a very rough month, dropping 28% and undoing the prior period's positive performance. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 18% in that time.

In spite of the heavy fall in price, there still wouldn't be many who think Shanghai Golden Bridge InfoTechLtd's price-to-sales (or "P/S") ratio of 4.8x is worth a mention when the median P/S in China's Software industry is similar at about 4.5x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

See our latest analysis for Shanghai Golden Bridge InfoTechLtd

What Does Shanghai Golden Bridge InfoTechLtd's Recent Performance Look Like?

Shanghai Golden Bridge InfoTechLtd could be doing better as it's been growing revenue less than most other companies lately. One possibility is that the P/S ratio is moderate because investors think this lacklustre revenue performance will turn around. You'd really hope so, otherwise you're paying a relatively elevated price for a company with this sort of growth profile.

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

How Is Shanghai Golden Bridge InfoTechLtd's Revenue Growth Trending?

In order to justify its P/S ratio, Shanghai Golden Bridge InfoTechLtd would need to produce growth that's similar to the industry.

Retrospectively, the last year delivered virtually the same number to the company's top line as the year before. Still, the latest three year period was better as it's delivered a decent 5.3% overall rise in revenue. Accordingly, shareholders probably wouldn't have been overly satisfied with the unstable medium-term growth rates.

Shifting to the future, estimates from the lone analyst covering the company suggest revenue should grow by 43% over the next year. That's shaping up to be materially higher than the 30% growth forecast for the broader industry.

With this in consideration, we find it intriguing that Shanghai Golden Bridge InfoTechLtd's P/S is closely matching its industry peers. It may be that most investors aren't convinced the company can achieve future growth expectations.

The Bottom Line On Shanghai Golden Bridge InfoTechLtd's P/S

Shanghai Golden Bridge InfoTechLtd's plummeting stock price has brought its P/S back to a similar region as the rest of the industry. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

We've established that Shanghai Golden Bridge InfoTechLtd currently trades on a lower than expected P/S since its forecasted revenue growth is higher than the wider industry. When we see a strong revenue outlook, with growth outpacing the industry, we can only assume potential uncertainty around these figures are what might be placing slight pressure on the P/S ratio. This uncertainty seems to be reflected in the share price which, while stable, could be higher given the revenue forecasts.

Don't forget that there may be other risks. For instance, we've identified 3 warning signs for Shanghai Golden Bridge InfoTechLtd that you should be aware of.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

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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.