More Unpleasant Surprises Could Be In Store For Haisung Aero-Robotics Co., Ltd.'s (KOSDAQ:059270) Shares After Tumbling 31%

To the annoyance of some shareholders, Haisung Aero-Robotics Co., Ltd. (KOSDAQ:059270) shares are down a considerable 31% in the last month, which continues a horrid run for the company. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 14% share price drop.

Although its price has dipped substantially, you could still be forgiven for thinking Haisung Aero-Robotics is a stock to steer clear of with a price-to-sales ratios (or "P/S") of 4x, considering almost half the companies in Korea's Machinery industry have P/S ratios below 0.9x. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so lofty.

Check out our latest analysis for Haisung Aero-Robotics

How Has Haisung Aero-Robotics Performed Recently?

Revenue has risen at a steady rate over the last year for Haisung Aero-Robotics, which is generally not a bad outcome. It might be that many expect the reasonable revenue performance to beat most other companies over the coming period, which has increased investors’ willingness to pay up for the stock. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

Although there are no analyst estimates available for Haisung Aero-Robotics, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.

How Is Haisung Aero-Robotics' Revenue Growth Trending?

In order to justify its P/S ratio, Haisung Aero-Robotics would need to produce outstanding growth that's well in excess of the industry.

Retrospectively, the last year delivered a decent 3.7% gain to the company's revenues. Still, lamentably revenue has fallen 10% in aggregate from three years ago, which is disappointing. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

In contrast to the company, the rest of the industry is expected to grow by 33% over the next year, which really puts the company's recent medium-term revenue decline into perspective.

In light of this, it's alarming that Haisung Aero-Robotics' P/S sits above the majority of other companies. Apparently many investors in the company are way more bullish than recent times would indicate and aren't willing to let go of their stock at any price. Only the boldest would assume these prices are sustainable as a continuation of recent revenue trends is likely to weigh heavily on the share price eventually.

The Key Takeaway

Haisung Aero-Robotics' shares may have suffered, but its P/S remains high. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

We've established that Haisung Aero-Robotics currently trades on a much higher than expected P/S since its recent revenues have been in decline over the medium-term. Right now we aren't comfortable with the high P/S as this revenue performance is highly unlikely to support such positive sentiment for long. If recent medium-term revenue trends continue, it will place shareholders' investments at significant risk and potential investors in danger of paying an excessive premium.

You should always think about risks. Case in point, we've spotted 3 warning signs for Haisung Aero-Robotics you should be aware of.

If these risks are making you reconsider your opinion on Haisung Aero-Robotics, 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.