After Leaping 30% VINA TECH Co.,Ltd. (KOSDAQ:126340) Shares Are Not Flying Under The Radar

VINA TECH Co.,Ltd. (KOSDAQ:126340) shareholders have had their patience rewarded with a 30% share price jump in the last month. But the gains over the last month weren't enough to make shareholders whole, as the share price is still down 2.7% in the last twelve months.

Since its price has surged higher, you could be forgiven for thinking VINA TECHLtd is a stock to steer clear of with a price-to-sales ratios (or "P/S") of 6.5x, considering almost half the companies in Korea's Electronic industry have P/S ratios below 1x. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.

Check out our latest analysis for VINA TECHLtd

How VINA TECHLtd Has Been Performing

VINA TECHLtd hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. One possibility is that the P/S ratio is high because investors think this poor revenue performance will turn the corner. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

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

How Is VINA TECHLtd's Revenue Growth Trending?

In order to justify its P/S ratio, VINA TECHLtd would need to produce outstanding growth that's well in excess of the industry.

Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 22%. Regardless, revenue has managed to lift by a handy 18% in aggregate from three years ago, thanks to the earlier period of growth. Although it's been a bumpy ride, it's still fair to say the revenue growth recently has been mostly respectable for the company.

Looking ahead now, revenue is anticipated to climb by 57% each year during the coming three years according to the sole analyst following the company. Meanwhile, the rest of the industry is forecast to only expand by 18% per year, which is noticeably less attractive.

In light of this, it's understandable that VINA TECHLtd's P/S sits above the majority of other companies. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

What We Can Learn From VINA TECHLtd's P/S?

The strong share price surge has lead to VINA TECHLtd's P/S soaring as well. 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 look into VINA TECHLtd shows that its P/S ratio remains high on the merit of its strong future revenues. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. It's hard to see the share price falling strongly in the near future under these circumstances.

Plus, you should also learn about these 3 warning signs we've spotted with VINA TECHLtd (including 1 which is potentially serious).

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