Some Confidence Is Lacking In Hyundai Bng Steel Co., Ltd. (KRX:004560) As Shares Slide 25%

The Hyundai Bng Steel Co., Ltd. (KRX:004560) share price has fared very poorly over the last month, falling by a substantial 25%. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 34% in that time.

Although its price has dipped substantially, there still wouldn't be many who think Hyundai Bng Steel's price-to-sales (or "P/S") ratio of 0.2x is worth a mention when the median P/S in Korea's Metals and Mining industry is similar at about 0.3x. 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.

See our latest analysis for Hyundai Bng Steel

What Does Hyundai Bng Steel's Recent Performance Look Like?

As an illustration, revenue has deteriorated at Hyundai Bng Steel over the last year, which is not ideal at all. One possibility is that the P/S is moderate because investors think the company might still do enough to be in line with the broader industry in the near future. If you like the company, you'd at least be hoping this is the case so that you could potentially pick up some stock while it's not quite in favour.

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

How Is Hyundai Bng Steel's Revenue Growth Trending?

In order to justify its P/S ratio, Hyundai Bng Steel would need to produce growth that's similar to the industry.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 26%. This has erased any of its gains during the last three years, with practically no change in revenue being achieved in total. Accordingly, shareholders probably wouldn't have been overly satisfied with the unstable medium-term growth rates.

Comparing the recent medium-term revenue trends against the industry's one-year growth forecast of 7.4% shows it's noticeably less attractive.

With this information, we find it interesting that Hyundai Bng Steel is trading at a fairly similar P/S compared to the industry. It seems most investors are ignoring the fairly limited recent growth rates and are willing to pay up for exposure to the stock. Maintaining these prices will be difficult to achieve as a continuation of recent revenue trends is likely to weigh down the shares eventually.

The Bottom Line On Hyundai Bng Steel's P/S

With its share price dropping off a cliff, the P/S for Hyundai Bng Steel looks to be in line with the rest of the Metals and Mining 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.

Our examination of Hyundai Bng Steel revealed its poor three-year revenue trends aren't resulting in a lower P/S as per our expectations, given they look worse than current industry outlook. When we see weak revenue with slower than industry growth, we suspect the share price is at risk of declining, bringing the P/S back in line with expectations. Unless the recent medium-term conditions improve, it's hard to accept the current share price as fair value.

You should always think about risks. Case in point, we've spotted 1 warning sign for Hyundai Bng Steel you should be aware of.

If these risks are making you reconsider your opinion on Hyundai Bng Steel, 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.