Even With A 212% Surge, Cautious Investors Are Not Rewarding ITCENGLOBAL CO., Ltd.'s (KOSDAQ:124500) Performance Completely

ITCENGLOBAL CO., Ltd. (KOSDAQ:124500) shares have continued their recent momentum with a 212% gain in the last month alone. This latest share price bounce rounds out a remarkable 651% gain over the last twelve months.

Although its price has surged higher, considering around half the companies operating in Korea's IT industry have price-to-sales ratios (or "P/S") above 0.9x, you may still consider ITCENGLOBAL as an solid investment opportunity with its 0.1x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

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Check out our latest analysis for ITCENGLOBAL

How Has ITCENGLOBAL Performed Recently?

ITCENGLOBAL certainly has been doing a great job lately as it's been growing its revenue at a really rapid pace. Perhaps the market is expecting future revenue performance to dwindle, which has kept the P/S suppressed. Those who are bullish on ITCENGLOBAL will be hoping that this isn't the case, so that they can pick up the stock at a lower valuation.

We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on ITCENGLOBAL's earnings, revenue and cash flow.

What Are Revenue Growth Metrics Telling Us About The Low P/S?

ITCENGLOBAL's P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.

Taking a look back first, we see that the company grew revenue by an impressive 82% last year. The latest three year period has also seen an excellent 78% overall rise in revenue, aided by its short-term performance. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

This is in contrast to the rest of the industry, which is expected to grow by 4.2% over the next year, materially lower than the company's recent medium-term annualised growth rates.

With this information, we find it odd that ITCENGLOBAL is trading at a P/S lower than the industry. It looks like most investors are not convinced the company can maintain its recent growth rates.

What We Can Learn From ITCENGLOBAL's P/S?

The latest share price surge wasn't enough to lift ITCENGLOBAL's P/S close to the industry median. 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.

Our examination of ITCENGLOBAL revealed its three-year revenue trends aren't boosting its P/S anywhere near as much as we would have predicted, given they look better than current industry expectations. Potential investors that are sceptical over continued revenue performance may be preventing the P/S ratio from matching previous strong performance. It appears many are indeed anticipating revenue instability, because the persistence of these recent medium-term conditions would normally provide a boost to the share price.

Plus, you should also learn about this 1 warning sign we've spotted with ITCENGLOBAL.

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