Investors Appear Satisfied With Suzhou UIGreen Micro&Nano Technologies Co.,Ltd's (SHSE:688661) Prospects As Shares Rocket 31%

Despite an already strong run, Suzhou UIGreen Micro&Nano Technologies Co.,Ltd (SHSE:688661) shares have been powering on, with a gain of 31% in the last thirty days. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 43% over that time.

Since its price has surged higher, given around half the companies in China's Electronic industry have price-to-sales ratios (or "P/S") below 3.7x, you may consider Suzhou UIGreen Micro&Nano TechnologiesLtd as a stock to avoid entirely with its 13.1x P/S ratio. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.

See our latest analysis for Suzhou UIGreen Micro&Nano TechnologiesLtd

How Suzhou UIGreen Micro&Nano TechnologiesLtd Has Been Performing

Recent times have been advantageous for Suzhou UIGreen Micro&Nano TechnologiesLtd as its revenues have been rising faster than most other companies. It seems the market expects this form will continue into the future, hence the elevated P/S ratio. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

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

Is There Enough Revenue Growth Forecasted For Suzhou UIGreen Micro&Nano TechnologiesLtd?

The only time you'd be truly comfortable seeing a P/S as steep as Suzhou UIGreen Micro&Nano TechnologiesLtd's is when the company's growth is on track to outshine the industry decidedly.

If we review the last year of revenue growth, the company posted a terrific increase of 41%. Revenue has also lifted 21% in aggregate from three years ago, mostly thanks to the last 12 months of growth. So we can start by confirming that the company has actually done a good job of growing revenue over that time.

Shifting to the future, estimates from the dual analysts covering the company suggest revenue should grow by 121% over the next year. With the industry only predicted to deliver 26%, the company is positioned for a stronger revenue result.

With this information, we can see why Suzhou UIGreen Micro&Nano TechnologiesLtd is trading at such a high P/S compared to the industry. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Final Word

Suzhou UIGreen Micro&Nano TechnologiesLtd's P/S has grown nicely over the last month thanks to a handy boost in the share price. 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.

As we suspected, our examination of Suzhou UIGreen Micro&Nano TechnologiesLtd'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 these conditions change, they will continue to provide strong support to the share price.

Plus, you should also learn about this 1 warning sign we've spotted with Suzhou UIGreen Micro&Nano TechnologiesLtd.

If these risks are making you reconsider your opinion on Suzhou UIGreen Micro&Nano TechnologiesLtd, explore our interactive list of high quality stocks to get an idea of what else is out there.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.