Market Might Still Lack Some Conviction On Pyung Hwa Holdings Co., Ltd. (KRX:010770) Even After 98% Share Price Boost

Despite an already strong run, Pyung Hwa Holdings Co., Ltd. (KRX:010770) shares have been powering on, with a gain of 98% in the last thirty days. The last month tops off a massive increase of 132% in the last year.

Even after such a large jump in price, there still wouldn't be many who think Pyung Hwa Holdings' price-to-sales (or "P/S") ratio of 0.1x is worth a mention when the median P/S in Korea's Auto Components industry is similar at about 0.2x. 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 Pyung Hwa Holdings

What Does Pyung Hwa Holdings' P/S Mean For Shareholders?

The recent revenue growth at Pyung Hwa Holdings would have to be considered satisfactory if not spectacular. It might be that many expect the respectable revenue performance to only match most other companies over the coming period, which has kept the P/S from rising. If not, then at least existing shareholders probably aren't too pessimistic 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 Pyung Hwa Holdings will help you shine a light on its historical performance.

Is There Some Revenue Growth Forecasted For Pyung Hwa Holdings?

In order to justify its P/S ratio, Pyung Hwa Holdings would need to produce growth that's similar to the industry.

If we review the last year of revenue growth, the company posted a worthy increase of 3.5%. This was backed up an excellent period prior to see revenue up by 30% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.

When compared to the industry's one-year growth forecast of 5.1%, the most recent medium-term revenue trajectory is noticeably more alluring

With this information, we find it interesting that Pyung Hwa Holdings is trading at a fairly similar P/S compared to the industry. Apparently some shareholders believe the recent performance is at its limits and have been accepting lower selling prices.

The Final Word

Pyung Hwa Holdings appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

To our surprise, Pyung Hwa Holdings revealed its three-year revenue trends aren't contributing to its P/S as much as we would have predicted, given they look better than current industry expectations. It'd be fair to assume that potential risks the company faces could be the contributing factor to the lower than expected P/S. It appears some are indeed anticipating revenue instability, because the persistence of these recent medium-term conditions would normally provide a boost to the share price.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Pyung Hwa Holdings (2 are concerning!) that you need to be mindful of.

If these risks are making you reconsider your opinion on Pyung Hwa Holdings, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.