There's No Escaping Phoenix Media Investment (Holdings) Limited's (HKG:2008) Muted Revenues Despite A 50% Share Price Rise

Despite an already strong run, Phoenix Media Investment (Holdings) Limited (HKG:2008) shares have been powering on, with a gain of 50% in the last thirty days. The last 30 days bring the annual gain to a very sharp 62%.

In spite of the firm bounce in price, considering around half the companies operating in Hong Kong's Media industry have price-to-sales ratios (or "P/S") above 1.1x, you may still consider Phoenix Media Investment (Holdings) as an solid investment opportunity with its 0.6x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

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Check out our latest analysis for Phoenix Media Investment (Holdings)

What Does Phoenix Media Investment (Holdings)'s P/S Mean For Shareholders?

For instance, Phoenix Media Investment (Holdings)'s receding revenue in recent times would have to be some food for thought. It might be that many expect the disappointing revenue performance to continue or accelerate, which has repressed the P/S. However, if this doesn't eventuate then existing shareholders may be feeling optimistic 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 Phoenix Media Investment (Holdings) will help you shine a light on its historical performance.

Do Revenue Forecasts Match The Low P/S Ratio?

In order to justify its P/S ratio, Phoenix Media Investment (Holdings) would need to produce sluggish growth that's trailing the industry.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 13%. The last three years don't look nice either as the company has shrunk revenue by 37% in aggregate. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.

Weighing that medium-term revenue trajectory against the broader industry's one-year forecast for expansion of 17% shows it's an unpleasant look.

With this in mind, we understand why Phoenix Media Investment (Holdings)'s P/S is lower than most of its industry peers. Nonetheless, there's no guarantee the P/S has reached a floor yet with revenue going in reverse. Even just maintaining these prices could be difficult to achieve as recent revenue trends are already weighing down the shares.

What Does Phoenix Media Investment (Holdings)'s P/S Mean For Investors?

The latest share price surge wasn't enough to lift Phoenix Media Investment (Holdings)'s P/S close to the industry median. 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.

It's no surprise that Phoenix Media Investment (Holdings) maintains its low P/S off the back of its sliding revenue over the medium-term. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises either. Given the current circumstances, it seems unlikely that the share price will experience any significant movement in either direction in the near future if recent medium-term revenue trends persist.

There are also other vital risk factors to consider before investing and we've discovered 1 warning sign for Phoenix Media Investment (Holdings) that you should be aware of.

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.

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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.