ENVIONEER Co.,Ltd.'s (KOSDAQ:317870) P/S Is Still On The Mark Following 25% Share Price Bounce

ENVIONEER Co.,Ltd. (KOSDAQ:317870) shares have had a really impressive month, gaining 25% after a shaky period beforehand. The last month tops off a massive increase of 200% in the last year.

Following the firm bounce in price, you could be forgiven for thinking ENVIONEERLtd is a stock to steer clear of with a price-to-sales ratios (or "P/S") of 10.4x, considering almost half the companies in Korea's Chemicals industry have P/S ratios below 0.8x. 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 ENVIONEERLtd

How ENVIONEERLtd Has Been Performing

With revenue growth that's exceedingly strong of late, ENVIONEERLtd has been doing very well. Perhaps the market is expecting future revenue performance to outperform the wider market, which has seemingly got people interested in the stock. If not, then existing shareholders might 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 ENVIONEERLtd will help you shine a light on its historical performance.

Is There Enough Revenue Growth Forecasted For ENVIONEERLtd?

The only time you'd be truly comfortable seeing a P/S as steep as ENVIONEERLtd's is when the company's growth is on track to outshine the industry decidedly.

Taking a look back first, we see that the company grew revenue by an impressive 57% last year. Pleasingly, revenue has also lifted 86% in aggregate from three years ago, thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing revenue over that time.

When compared to the industry's one-year growth forecast of 3.1%, the most recent medium-term revenue trajectory is noticeably more alluring

With this information, we can see why ENVIONEERLtd is trading at such a high P/S compared to the industry. Presumably shareholders aren't keen to offload something they believe will continue to outmanoeuvre the wider industry.

What Does ENVIONEERLtd's P/S Mean For Investors?

Shares in ENVIONEERLtd have seen a strong upwards swing lately, which has really helped boost its P/S figure. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

It's no surprise that ENVIONEERLtd can support its high P/S given the strong revenue growth its experienced over the last three-year is superior to the current industry outlook. At this stage investors feel the potential continued revenue growth in the future is great enough to warrant an inflated P/S. Barring any significant changes to the company's ability to make money, the share price should continue to be propped up.

There are also other vital risk factors to consider before investing and we've discovered 1 warning sign for ENVIONEERLtd that you should be aware of.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.