Slammed 26% iWIN PLUS CO.,LTD. (KOSDAQ:123010) Screens Well Here But There Might Be A Catch

iWIN PLUS CO.,LTD. (KOSDAQ:123010) shares have retraced a considerable 26% in the last month, reversing a fair amount of their solid recent performance. Indeed, the recent drop has reduced its annual gain to a relatively sedate 3.6% over the last twelve months.

In spite of the heavy fall in price, it's still not a stretch to say that iWIN PLUSLTD's price-to-sales (or "P/S") ratio of 1x right now seems quite "middle-of-the-road" compared to the Semiconductor industry in Korea, where the median P/S ratio is around 1.2x. 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.

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Check out our latest analysis for iWIN PLUSLTD

How Has iWIN PLUSLTD Performed Recently?

iWIN PLUSLTD has been doing a good job lately as it's been growing revenue at a solid pace. It might be that many expect the respectable revenue performance to wane, which has kept the P/S from rising. Those who are bullish on iWIN PLUSLTD will be hoping that this isn't the case, so that they can pick up the stock at a lower valuation.

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

How Is iWIN PLUSLTD's Revenue Growth Trending?

There's an inherent assumption that a company should be matching the industry for P/S ratios like iWIN PLUSLTD's to be considered reasonable.

Taking a look back first, we see that the company grew revenue by an impressive 22% last year. This great performance means it was also able to deliver immense revenue growth 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 30% 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 curious that iWIN PLUSLTD's P/S sits in line with the majority of other companies. Apparently some shareholders believe the recent performance is at its limits and have been accepting lower selling prices.

The Final Word

iWIN PLUSLTD's plummeting stock price has brought its P/S back to a similar region as the rest of the industry. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

To our surprise, iWIN PLUSLTD revealed its three-year revenue trends aren't contributing to its P/S as much as we would have predicted, given they look better than current industry expectations. When we see strong revenue with faster-than-industry growth, we can only assume potential risks are what might be placing pressure on the P/S ratio. While recent revenue trends over the past medium-term suggest that the risk of a price decline is low, investors appear to see the likelihood of revenue fluctuations in the future.

Before you settle on your opinion, we've discovered 3 warning signs for iWIN PLUSLTD (2 are a bit unpleasant!) that you should be aware of.

If these risks are making you reconsider your opinion on iWIN PLUSLTD, 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.