Investors Still Aren't Entirely Convinced By Kingkey Financial International (Holdings) Limited's (HKG:1468) Revenues Despite 208% Price Jump

Kingkey Financial International (Holdings) Limited (HKG:1468) shares have had a really impressive month, gaining 208% after a shaky period beforehand. But the last month did very little to improve the 84% share price decline over the last year.

Even after such a large jump in price, it's still not a stretch to say that Kingkey Financial International (Holdings)'s price-to-sales (or "P/S") ratio of 4.7x right now seems quite "middle-of-the-road" compared to the Capital Markets industry in Hong Kong, where the median P/S ratio is around 4.3x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

View our latest analysis for Kingkey Financial International (Holdings)

What Does Kingkey Financial International (Holdings)'s Recent Performance Look Like?

It looks like revenue growth has deserted Kingkey Financial International (Holdings) recently, which is not something to boast about. It might be that many expect the uninspiring revenue performance to only match most other companies at best over the coming period, which has kept the P/S from rising. If not, then existing shareholders may be feeling hopeful about the future direction of the share price.

Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Kingkey Financial International (Holdings) will help you shine a light on its historical performance.

How Is Kingkey Financial International (Holdings)'s Revenue Growth Trending?

There's an inherent assumption that a company should be matching the industry for P/S ratios like Kingkey Financial International (Holdings)'s to be considered reasonable.

Taking a look back first, we see that there was hardly any revenue growth to speak of for the company over the past year. However, a few strong years before that means that it was still able to grow revenue by an impressive 122% in total over the last three years. Accordingly, shareholders will be pleased, but also have some questions to ponder about the last 12 months.

Comparing that to the industry, which is only predicted to deliver 23% growth in the next 12 months, the company's momentum is stronger based on recent medium-term annualised revenue results.

With this information, we find it interesting that Kingkey Financial International (Holdings) is trading at a fairly similar P/S compared to the industry. It may be that most investors are not convinced the company can maintain its recent growth rates.

What We Can Learn From Kingkey Financial International (Holdings)'s P/S?

Kingkey Financial International (Holdings)'s stock has a lot of momentum behind it lately, which has brought its P/S level with 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 didn't quite envision Kingkey Financial International (Holdings)'s P/S sitting in line with the wider industry, considering the revenue growth over the last three-year is higher than the current industry outlook. When we see strong revenue with faster-than-industry growth, we can only assume potential risks are what might be placing pressure on the P/S ratio. At least the risk of a price drop looks to be subdued if recent medium-term revenue trends continue, but investors seem to think future revenue could see some volatility.

Having said that, be aware Kingkey Financial International (Holdings) is showing 3 warning signs in our investment analysis, and 2 of those are a bit concerning.

If you're unsure about the strength of Kingkey Financial International (Holdings)'s business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.