Business-intelligence of Oriental Nations Corporation Ltd.'s (SZSE:300166) 26% Dip In Price Shows Sentiment Is Matching Revenues

Business-intelligence of Oriental Nations Corporation Ltd. (SZSE:300166) shareholders won't be pleased to see that the share price has had a very rough month, dropping 26% 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 47% in that time.

Following the heavy fall in price, Business-intelligence of Oriental Nations' price-to-sales (or "P/S") ratio of 3.3x might make it look like a buy right now compared to the Software industry in China, where around half of the companies have P/S ratios above 4.5x and even P/S above 8x are quite common. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

Check out our latest analysis for Business-intelligence of Oriental Nations

What Does Business-intelligence of Oriental Nations' Recent Performance Look Like?

Business-intelligence of Oriental Nations hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. The P/S ratio is probably low because investors think this poor revenue performance isn't going to get any better. So while you could say the stock is cheap, investors will be looking for improvement before they see it as good value.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Business-intelligence of Oriental Nations.

How Is Business-intelligence of Oriental Nations' Revenue Growth Trending?

There's an inherent assumption that a company should underperform the industry for P/S ratios like Business-intelligence of Oriental Nations' to be considered reasonable.

Retrospectively, the last year delivered a frustrating 3.6% decrease to the company's top line. Regardless, revenue has managed to lift by a handy 5.1% in aggregate from three years ago, thanks to the earlier period of growth. So we can start by confirming that the company has generally done a good job of growing revenue over that time, even though it had some hiccups along the way.

Looking ahead now, revenue is anticipated to climb by 18% during the coming year according to the sole analyst following the company. That's shaping up to be materially lower than the 28% growth forecast for the broader industry.

In light of this, it's understandable that Business-intelligence of Oriental Nations' P/S sits below the majority of other companies. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.

The Bottom Line On Business-intelligence of Oriental Nations' P/S

Business-intelligence of Oriental Nations' recently weak share price has pulled its P/S back below other Software companies. 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.

We've established that Business-intelligence of Oriental Nations maintains its low P/S on the weakness of its forecast growth being lower than the wider industry, as expected. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. The company will need a change of fortune to justify the P/S rising higher in the future.

Many other vital risk factors can be found on the company's balance sheet. You can assess many of the main risks through our free balance sheet analysis for Business-intelligence of Oriental Nations with six simple checks.

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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