Positive Sentiment Still Eludes TianJin 712 Communication & Broadcasting Co., Ltd. (SHSE:603712) Following 28% Share Price Slump

TianJin 712 Communication & Broadcasting Co., Ltd. (SHSE:603712) 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 45% in that time.

Although its price has dipped substantially, there still wouldn't be many who think TianJin 712 Communication & Broadcasting's price-to-sales (or "P/S") ratio of 4.8x is worth a mention when it essentially matches the median P/S in China's Communications industry. 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.

View our latest analysis for TianJin 712 Communication & Broadcasting

What Does TianJin 712 Communication & Broadcasting's P/S Mean For Shareholders?

TianJin 712 Communication & Broadcasting 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. It might be that many expect the dour revenue performance to strengthen positively, which has kept the P/S from falling. You'd really hope so, otherwise you're paying a relatively elevated price for a company with this sort of growth profile.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on TianJin 712 Communication & Broadcasting.

Do Revenue Forecasts Match The P/S Ratio?

The only time you'd be comfortable seeing a P/S like TianJin 712 Communication & Broadcasting's is when the company's growth is tracking the industry closely.

Retrospectively, the last year delivered a frustrating 36% decrease to the company's top line. The last three years don't look nice either as the company has shrunk revenue by 17% in aggregate. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.

Looking ahead now, revenue is anticipated to climb by 76% during the coming year according to the four analysts following the company. That's shaping up to be materially higher than the 37% growth forecast for the broader industry.

In light of this, it's curious that TianJin 712 Communication & Broadcasting's P/S sits in line with the majority of other companies. It may be that most investors aren't convinced the company can achieve future growth expectations.

What We Can Learn From TianJin 712 Communication & Broadcasting's P/S?

With its share price dropping off a cliff, the P/S for TianJin 712 Communication & Broadcasting looks to be in line with the rest of the Communications industry. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

Despite enticing revenue growth figures that outpace the industry, TianJin 712 Communication & Broadcasting's P/S isn't quite what we'd expect. 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. However, if you agree with the analysts' forecasts, you may be able to pick up the stock at an attractive price.

Before you settle on your opinion, we've discovered 2 warning signs for TianJin 712 Communication & Broadcasting 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.