Mobvista (SEHK:1860) Valuation in Focus After Sales Jump and Swing to Net Loss

Mobvista (SEHK:1860) just released its third quarter earnings, revealing a jump in sales compared to last year. However, investors are weighing the shift from net profit to net loss over the same period.

See our latest analysis for Mobvista.

Mobvista’s 1-day share price return of 5.09% shows investors reacting quickly to the earnings headlines. This follows a sharp 18.5% decline over the past week. Despite recent volatility, the stock’s year-to-date price gain of 112.92% and robust 83.38% total shareholder return over the past year highlight strong momentum and long-term gains. Profit swings have also brought fresh risks into focus.

If Mobvista’s latest earnings shift has you rethinking your watchlist, this is a great time to discover fast growing stocks with high insider ownership

With Mobvista delivering impressive revenue growth but slipping into the red, investors may be wondering if the recent pullback is a rare value opportunity, or if the market is already factoring in all future gains.

Price-to-Sales Ratio of 1.5x: Is it justified?

Mobvista’s current valuation is based on a price-to-sales (P/S) ratio of 1.5x, compared to the peer average of 2x. At the last close of HK$14.67, the market is pricing Mobvista below its peer group using this metric, suggesting a notable discount.

The price-to-sales ratio measures how much investors are willing to pay for every dollar of the company’s sales. This metric is commonly used for technology and media companies, especially those that are unprofitable, as it is less influenced by earnings fluctuations and can offer a clearer industry comparison.

This apparent undervaluation means the market may be underpricing Mobvista’s sales growth, even as the company moves through volatile profit cycles. Compared to the Hong Kong Media industry average of 1.2x, Mobvista trades at a slight premium to direct competitors but remains well below the estimated fair ratio of 2.9x. This is a level that experts might expect the market to move towards if strong growth persists.

Explore the SWS fair ratio for Mobvista

Result: Preferred multiple of 1.5x (UNDERVALUED)

However, the steep discount to analyst price targets and the recent swing to net loss could undermine further upside if momentum weakens.

Find out about the key risks to this Mobvista narrative.

Another View: What Does the SWS DCF Model Say?

While Mobvista appears underpriced compared to its sales, our DCF model provides an even stronger perspective. According to this approach, Mobvista trades at a steep 52% discount to our estimated fair value of HK$30.55. This suggests there could be additional upside, depending on whether growth continues. Is the market missing the bigger picture, or is it pricing risk appropriately?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Mobvista for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 920 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Mobvista Narrative

If you see the numbers differently or want to dig deeper on your own, it only takes a few minutes to craft your own view. Do it your way

A great starting point for your Mobvista research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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