Market Participants Recognise MEMSensing Microsystems (Suzhou, China) Co., Ltd.'s (SHSE:688286) Revenues Pushing Shares 28% Higher

MEMSensing Microsystems (Suzhou, China) Co., Ltd. (SHSE:688286) shares have continued their recent momentum with a 28% gain in the last month alone. Looking back a bit further, it's encouraging to see the stock is up 27% in the last year.

Following the firm bounce in price, MEMSensing Microsystems (Suzhou China) may be sending very bearish signals at the moment with a price-to-sales (or "P/S") ratio of 9.1x, since almost half of all companies in the Electronic industry in China have P/S ratios under 4.6x and even P/S lower than 2x 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.

View our latest analysis for MEMSensing Microsystems (Suzhou China)

How Has MEMSensing Microsystems (Suzhou China) Performed Recently?

Recent times have been advantageous for MEMSensing Microsystems (Suzhou China) as its revenues have been rising faster than most other companies. The P/S is probably high because investors think this strong revenue performance will continue. If not, then existing shareholders might be a little nervous about the viability of the share price.

Keen to find out how analysts think MEMSensing Microsystems (Suzhou China)'s future stacks up against the industry? In that case, our free report is a great place to start.

Do Revenue Forecasts Match The High P/S Ratio?

In order to justify its P/S ratio, MEMSensing Microsystems (Suzhou China) would need to produce outstanding growth that's well in excess of the industry.

If we review the last year of revenue growth, the company posted a terrific increase of 35%. As a result, it also grew revenue by 26% in total over the last three years. So we can start by confirming that the company has actually done a good job of growing revenue over that time.

Looking ahead now, revenue is anticipated to climb by 34% during the coming year according to the three analysts following the company. With the industry only predicted to deliver 27%, the company is positioned for a stronger revenue result.

In light of this, it's understandable that MEMSensing Microsystems (Suzhou China)'s P/S sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

What We Can Learn From MEMSensing Microsystems (Suzhou China)'s P/S?

Shares in MEMSensing Microsystems (Suzhou China) have seen a strong upwards swing lately, which has really helped boost its P/S figure. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

As we suspected, our examination of MEMSensing Microsystems (Suzhou China)'s analyst forecasts revealed that its superior revenue outlook is contributing to its high P/S. At this stage investors feel the potential for a deterioration in revenues is quite remote, justifying the elevated P/S ratio. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

Before you settle on your opinion, we've discovered 2 warning signs for MEMSensing Microsystems (Suzhou China) that you should be aware of.

It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).

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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.