Revenues Not Telling The Story For YES24 Co.,Ltd (KOSDAQ:053280) After Shares Rise 28%

Despite an already strong run, YES24 Co.,Ltd (KOSDAQ:053280) shares have been powering on, with a gain of 28% in the last thirty days. The last 30 days bring the annual gain to a very sharp 38%.

Even after such a large jump in price, there still wouldn't be many who think YES24Ltd's price-to-sales (or "P/S") ratio of 0.2x is worth a mention when the median P/S in Korea's Specialty Retail industry is similar at about 0.5x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

Check out our latest analysis for YES24Ltd

How Has YES24Ltd Performed Recently?

For instance, YES24Ltd's receding revenue in recent times would have to be some food for thought. It might be that many expect the company to put the disappointing revenue performance behind them over the coming period, which has kept the P/S from falling. 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.

Want the full picture on earnings, revenue and cash flow for the company? Then our free report on YES24Ltd will help you shine a light on its historical performance.

Is There Some Revenue Growth Forecasted For YES24Ltd?

The only time you'd be comfortable seeing a P/S like YES24Ltd's is when the company's growth is tracking the industry closely.

Retrospectively, the last year delivered a frustrating 1.3% decrease to the company's top line. At least revenue has managed not to go completely backwards from three years ago in aggregate, thanks to the earlier period of growth. 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 23% shows it's noticeably less attractive.

With this information, we find it interesting that YES24Ltd 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. They may be setting themselves up for future disappointment if the P/S falls to levels more in line with recent growth rates.

What Does YES24Ltd's P/S Mean For Investors?

Its shares have lifted substantially and now YES24Ltd's P/S is back within range of the industry median. 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 YES24Ltd's average P/S is a bit surprising since its recent three-year growth is lower than the wider industry forecast. Right now we are uncomfortable with the P/S as this revenue performance isn't likely to support a more positive sentiment for long. Unless the recent medium-term conditions improve, it's hard to accept the current share price as fair value.

There are also other vital risk factors to consider and we've discovered 3 warning signs for YES24Ltd (2 are a bit unpleasant!) that you should be aware of before investing here.

If these risks are making you reconsider your opinion on YES24Ltd, explore our interactive list of high quality stocks to get an idea of what else is out there.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.