SeAH Besteel Holdings Corporation's (KRX:001430) 41% Jump Shows Its Popularity With Investors

SeAH Besteel Holdings Corporation (KRX:001430) shares have continued their recent momentum with a 41% gain in the last month alone. The last 30 days bring the annual gain to a very sharp 57%.

Although its price has surged higher, you could still be forgiven for feeling indifferent about SeAH Besteel Holdings' P/S ratio of 0.3x, since the median price-to-sales (or "P/S") ratio for the Metals and Mining industry in Korea is about the same. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

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View our latest analysis for SeAH Besteel Holdings

What Does SeAH Besteel Holdings' P/S Mean For Shareholders?

SeAH Besteel Holdings could be doing better as its revenue has been going backwards lately while most other companies have been seeing positive revenue growth. One possibility is that the P/S ratio is moderate because investors think this poor revenue performance will turn around. You'd really hope so, otherwise you're paying a relatively elevated price for a company with this sort of growth profile.

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How Is SeAH Besteel Holdings' Revenue Growth Trending?

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

Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 8.3%. As a result, revenue from three years ago have also fallen 8.3% overall. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

Shifting to the future, estimates from the eight analysts covering the company suggest revenue should grow by 5.9% per annum over the next three years. With the industry predicted to deliver 4.5% growth each year, the company is positioned for a comparable revenue result.

With this in mind, it makes sense that SeAH Besteel Holdings' P/S is closely matching its industry peers. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

The Final Word

SeAH Besteel 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 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 seen that SeAH Besteel Holdings maintains an adequate P/S seeing as its revenue growth figures match the rest of the industry. At this stage investors feel the potential for an improvement or deterioration in revenue isn't great enough to push P/S in a higher or lower direction. If all things remain constant, the possibility of a drastic share price movement remains fairly remote.

Before you settle on your opinion, we've discovered 4 warning signs for SeAH Besteel Holdings (1 shouldn't be ignored!) that you should be aware of.

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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.