Take Care Before Jumping Onto Genew Technologies Co.,Ltd. (SHSE:688418) Even Though It's 27% Cheaper

Genew Technologies Co.,Ltd. (SHSE:688418) shares have retraced a considerable 27% in the last month, reversing a fair amount of their solid recent performance. The recent drop has obliterated the annual return, with the share price now down 8.0% over that longer period.

In spite of the heavy fall in price, there still wouldn't be many who think Genew TechnologiesLtd's price-to-sales (or "P/S") ratio of 4.6x is worth a mention when the median P/S in China's Communications industry is similar at about 3.9x. 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.

Check out our latest analysis for Genew TechnologiesLtd

What Does Genew TechnologiesLtd's P/S Mean For Shareholders?

With revenue growth that's superior to most other companies of late, Genew TechnologiesLtd has been doing relatively well. Perhaps the market is expecting this level of performance to taper off, keeping the P/S from soaring. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

Want the full picture on analyst estimates for the company? Then our free report on Genew TechnologiesLtd will help you uncover what's on the horizon.

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.

Retrospectively, the last year delivered an exceptional 23% gain to the company's top line. The latest three year period has also seen an excellent 43% overall rise in revenue, aided by its short-term performance. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Shifting to the future, estimates from the only analyst covering the company suggest revenue should grow by 108% over the next year. With the industry only predicted to deliver 50%, the company is positioned for a stronger revenue result.

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.

What Does Genew TechnologiesLtd's P/S Mean For Investors?

Genew TechnologiesLtd's plummeting stock price has brought its P/S back to a similar region as the rest of the industry. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

We've established that Genew TechnologiesLtd 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. However, if you agree with the analysts' forecasts, you may be able to pick up the stock at an attractive price.

You always need to take note of risks, for example - Genew TechnologiesLtd has 2 warning signs we think you should be aware of.

Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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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.