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Some Confidence Is Lacking In Beijing Asiacom Information Technology Co,.Ltd (SZSE:301085) As Shares Slide 27%
Beijing Asiacom Information Technology Co,.Ltd (SZSE:301085) shares have had a horrible month, losing 27% after a relatively good period beforehand. Looking back over the past twelve months the stock has been a solid performer regardless, with a gain of 13%.
Although its price has dipped substantially, it's still not a stretch to say that Beijing Asiacom Information Technology Co.Ltd's price-to-sales (or "P/S") ratio of 4.1x right now seems quite "middle-of-the-road" compared to the Electronic industry in China, where the median P/S ratio is around 4.5x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.
See our latest analysis for Beijing Asiacom Information Technology Co.Ltd
What Does Beijing Asiacom Information Technology Co.Ltd's P/S Mean For Shareholders?
For instance, Beijing Asiacom Information Technology Co.Ltd's receding revenue in recent times would have to be some food for thought. One possibility is that the P/S is moderate because investors think the company might still do enough to be in line with the broader industry in the near future. If not, then existing shareholders may be a little nervous about the viability of the share price.
We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Beijing Asiacom Information Technology Co.Ltd's earnings, revenue and cash flow.What Are Revenue Growth Metrics Telling Us About The P/S?
Beijing Asiacom Information Technology Co.Ltd's P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.
In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 26%. This has soured the latest three-year period, which nevertheless managed to deliver a decent 17% overall rise in revenue. Although it's been a bumpy ride, it's still fair to say the revenue growth recently has been mostly respectable for the company.
This is in contrast to the rest of the industry, which is expected to grow by 26% over the next year, materially higher than the company's recent medium-term annualised growth rates.
In light of this, it's curious that Beijing Asiacom Information Technology Co.Ltd's P/S sits in line with the majority of other companies. It seems most investors are ignoring the fairly limited recent growth rates and are willing to pay up for exposure to the stock. Maintaining these prices will be difficult to achieve as a continuation of recent revenue trends is likely to weigh down the shares eventually.
The Bottom Line On Beijing Asiacom Information Technology Co.Ltd's P/S
Beijing Asiacom Information Technology Co.Ltd's plummeting stock price has brought its P/S back to a similar region as the rest of the industry. 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.
We've established that Beijing Asiacom Information Technology Co.Ltd's average P/S is a bit surprising since its recent three-year growth is lower than the wider industry forecast. Right now we are uncomfortable with the P/S as this revenue performance isn't likely to support a more positive sentiment for long. Unless the recent medium-term conditions improve, it's hard to accept the current share price as fair value.
Plus, you should also learn about these 3 warning signs we've spotted with Beijing Asiacom Information Technology Co.Ltd.
If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.
Valuation is complex, but we're here to simplify it.
Discover if Beijing Asiacom Information Technology Co.Ltd might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
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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.
About SZSE:301085
Beijing Asiacom Information Technology Co.Ltd
Engages in the provision of computing power infrastructure services in Canada.
Adequate balance sheet very low.
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