Market Might Still Lack Some Conviction On Genew Technologies Co.,Ltd. (SHSE:688418) Even After 51% Share Price Boost

The Genew Technologies Co.,Ltd. (SHSE:688418) share price has done very well over the last month, posting an excellent gain of 51%. Unfortunately, despite the strong performance over the last month, the full year gain of 8.7% isn't as attractive.

In spite of the firm bounce in price, you could still be forgiven for feeling indifferent about Genew TechnologiesLtd's P/S ratio of 4.5x, since the median price-to-sales (or "P/S") ratio for the Communications industry in China is also close to 4.7x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

View our latest analysis for Genew TechnologiesLtd

How Has Genew TechnologiesLtd Performed Recently?

Recent times have been advantageous for Genew TechnologiesLtd as its revenues have been rising faster than most other companies. One possibility is that the P/S ratio is moderate because investors think this strong revenue performance might be about to tail off. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.

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

Is There Some Revenue Growth Forecasted For Genew TechnologiesLtd?

The only time you'd be comfortable seeing a P/S like Genew TechnologiesLtd's is when the company's growth is tracking the industry closely.

If we review the last year of revenue growth, the company posted a terrific increase of 52%. The latest three year period has also seen an excellent 94% overall rise in revenue, aided by its short-term performance. So we can start by confirming that the company has done a great job of growing revenue over that time.

Shifting to the future, estimates from the only analyst covering the company suggest revenue should grow by 74% over the next year. That's shaping up to be materially higher than the 42% growth forecast for the broader industry.

In light of this, it's curious that Genew TechnologiesLtd's P/S sits in line with the majority of other companies. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.

The Final Word

Genew TechnologiesLtd appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

Looking at Genew TechnologiesLtd's analyst forecasts revealed that its superior revenue outlook isn't giving the boost to its P/S that we would've expected. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. This uncertainty seems to be reflected in the share price which, while stable, could be higher given the revenue forecasts.

You always need to take note of risks, for example - Genew TechnologiesLtd has 1 warning sign we think you should be aware of.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.