CHEMTRONICS.Co.,Ltd. (KOSDAQ:089010) Stocks Shoot Up 27% But Its P/S Still Looks Reasonable

CHEMTRONICS.Co.,Ltd. (KOSDAQ:089010) shares have continued their recent momentum with a 27% gain in the last month alone. The last 30 days bring the annual gain to a very sharp 36%.

In spite of the firm bounce in price, there still wouldn't be many who think CHEMTRONICS.Co.Ltd's price-to-sales (or "P/S") ratio of 0.8x is worth a mention when the median P/S in Korea's Electronic industry is similar at about 0.7x. 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 CHEMTRONICS.Co.Ltd

How Has CHEMTRONICS.Co.Ltd Performed Recently?

With revenue growth that's superior to most other companies of late, CHEMTRONICS.Co.Ltd has been doing relatively well. It might be that many expect the strong revenue performance to wane, which has kept the P/S ratio from rising. If the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.

Want the full picture on analyst estimates for the company? Then our free report on CHEMTRONICS.Co.Ltd will help you uncover what's on the horizon.

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

In order to justify its P/S ratio, CHEMTRONICS.Co.Ltd would need to produce growth that's similar to the industry.

Retrospectively, the last year delivered a decent 9.2% gain to the company's revenues. The solid recent performance means it was also able to grow revenue by 9.3% in total over the last three years. Accordingly, shareholders would have probably been satisfied with the medium-term rates of revenue growth.

Shifting to the future, estimates from the sole analyst covering the company suggest revenue should grow by 8.9% over the next year. Meanwhile, the rest of the industry is forecast to expand by 7.8%, which is not materially different.

With this in mind, it makes sense that CHEMTRONICS.Co.Ltd's 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

CHEMTRONICS.Co.Ltd appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry 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.

A CHEMTRONICS.Co.Ltd's P/S seems about right to us given the knowledge that analysts are forecasting a revenue outlook that is similar to the Electronic industry. Right now shareholders are comfortable with the P/S as they are quite confident future revenue won't throw up any surprises. All things considered, if the P/S and revenue estimates contain no major shocks, then it's hard to see the share price moving strongly in either direction in the near future.

You need to take note of risks, for example - CHEMTRONICS.Co.Ltd has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.