Suzhou UIGreen Micro&Nano Technologies Co.,Ltd's (SHSE:688661) 26% Jump Shows Its Popularity With Investors

Suzhou UIGreen Micro&Nano Technologies Co.,Ltd (SHSE:688661) shareholders have had their patience rewarded with a 26% share price jump in the last month. The last 30 days bring the annual gain to a very sharp 69%.

Since its price has surged higher, Suzhou UIGreen Micro&Nano TechnologiesLtd may be sending strong sell signals at present with a price-to-sales (or "P/S") ratio of 11.2x, when you consider almost half of the companies in the Electronic industry in China have P/S ratios under 4.2x and even P/S lower than 2x aren't out of the ordinary. 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 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. However, if this isn't the case, investors might get caught out paying too much for the stock.

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.

What Are Revenue Growth Metrics Telling Us About The High P/S?

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.

Taking a look back first, we see that the company grew revenue by an impressive 99% last year. The strong recent performance means it was also able to grow revenue by 31% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Shifting to the future, estimates from the sole analyst covering the company suggest revenue should grow by 88% over the next year. Meanwhile, the rest of the industry is forecast to only expand by 26%, which is noticeably less attractive.

With this information, we can see why Suzhou UIGreen Micro&Nano TechnologiesLtd is trading at such a high P/S compared to the industry. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

What We Can Learn From Suzhou UIGreen Micro&Nano TechnologiesLtd's P/S?

The strong share price surge has lead to Suzhou UIGreen Micro&Nano TechnologiesLtd's P/S soaring as well. 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.

Our look into Suzhou UIGreen Micro&Nano TechnologiesLtd shows that its P/S ratio remains high on the merit of its strong future revenues. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. Unless these conditions change, they will continue to provide strong support to the share price.

It's always necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Suzhou UIGreen Micro&Nano TechnologiesLtd, and understanding should be part of your investment process.

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.