Shinsung Delta Tech Co.,Ltd. (KOSDAQ:065350) Shares Slammed 28% But Getting In Cheap Might Be Difficult Regardless

The Shinsung Delta Tech Co.,Ltd. (KOSDAQ:065350) share price has softened a substantial 28% over the previous 30 days, handing back much of the gains the stock has made lately. Regardless, last month's decline is barely a blip on the stock's price chart as it has gained a monstrous 650% in the last year.

Although its price has dipped substantially, when almost half of the companies in Korea's Electrical industry have price-to-sales ratios (or "P/S") below 1.1x, you may still consider Shinsung Delta TechLtd as a stock probably not worth researching with its 2.7x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's as high as it is.

See our latest analysis for Shinsung Delta TechLtd

What Does Shinsung Delta TechLtd's Recent Performance Look Like?

The recent revenue growth at Shinsung Delta TechLtd would have to be considered satisfactory if not spectacular. Perhaps the market believes the recent revenue performance is strong enough to outperform the industry, which has inflated the P/S ratio. If not, then existing shareholders may be a little nervous about the viability of the share price.

Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Shinsung Delta TechLtd will help you shine a light on its historical performance.

How Is Shinsung Delta TechLtd's Revenue Growth Trending?

In order to justify its P/S ratio, Shinsung Delta TechLtd would need to produce impressive growth in excess of the industry.

Taking a look back first, we see that the company managed to grow revenues by a handy 5.1% last year. This was backed up an excellent period prior to see revenue up by 69% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Comparing that to the industry, which is only predicted to deliver 2.4% growth in the next 12 months, the company's momentum is stronger based on recent medium-term annualised revenue results.

In light of this, it's understandable that Shinsung Delta TechLtd's P/S sits above the majority of other companies. It seems most investors are expecting this strong growth to continue and are willing to pay more for the stock.

The Key Takeaway

Shinsung Delta TechLtd's P/S remain high even after its stock plunged. 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.

As we suspected, our examination of Shinsung Delta TechLtd revealed its three-year revenue trends are contributing to its high P/S, given they look better than current industry expectations. Right now shareholders are comfortable with the P/S as they are quite confident revenue aren't under threat. Unless the recent medium-term conditions change, they will continue to provide strong support to the share price.

Before you settle on your opinion, we've discovered 2 warning signs for Shinsung Delta TechLtd that you should be aware of.

If these risks are making you reconsider your opinion on Shinsung Delta TechLtd, 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.