Subdued Growth No Barrier To Se Gyung Hi Tech Co., Ltd. (KOSDAQ:148150) With Shares Advancing 32%

Se Gyung Hi Tech Co., Ltd. (KOSDAQ:148150) shares have continued their recent momentum with a 32% gain in the last month alone. Taking a wider view, although not as strong as the last month, the full year gain of 15% is also fairly reasonable.

In spite of the firm bounce in price, it's still not a stretch to say that Se Gyung Hi Tech's price-to-sales (or "P/S") ratio of 0.8x right now seems quite "middle-of-the-road" compared to the Electronic industry in Korea, where the median P/S ratio is around 0.6x. 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.

Check out our latest analysis for Se Gyung Hi Tech

What Does Se Gyung Hi Tech's Recent Performance Look Like?

Recent times have been advantageous for Se Gyung Hi Tech as its revenues have been rising faster than most other companies. Perhaps the market is expecting this level of performance to taper off, keeping the P/S from soaring. 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 Se Gyung Hi Tech will help you uncover what's on the horizon.

Is There Some Revenue Growth Forecasted For Se Gyung Hi Tech?

In order to justify its P/S ratio, Se Gyung Hi Tech would need to produce growth that's similar to the industry.

If we review the last year of revenue growth, the company posted a worthy increase of 14%. The latest three year period has also seen a 29% overall rise in revenue, aided somewhat by its short-term performance. Therefore, it's fair to say the revenue growth recently has been respectable for the company.

Turning to the outlook, the next year should generate growth of 4.4% as estimated by the two analysts watching the company. Meanwhile, the rest of the industry is forecast to expand by 10.0%, which is noticeably more attractive.

With this in mind, we find it intriguing that Se Gyung Hi Tech's P/S is closely matching its industry peers. Apparently many investors in the company are less bearish than analysts indicate and aren't willing to let go of their stock right now. These shareholders may be setting themselves up for future disappointment if the P/S falls to levels more in line with the growth outlook.

What Does Se Gyung Hi Tech's P/S Mean For Investors?

Its shares have lifted substantially and now Se Gyung Hi Tech's P/S is back within range of the industry median. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

Given that Se Gyung Hi Tech's revenue growth projections are relatively subdued in comparison to the wider industry, it comes as a surprise to see it trading at its current P/S ratio. At present, we aren't confident in the P/S as the predicted future revenues aren't likely to support a more positive sentiment for long. A positive change is needed in order to justify the current price-to-sales ratio.

It is also worth noting that we have found 2 warning signs for Se Gyung Hi Tech that you need to take into consideration.

If you're unsure about the strength of Se Gyung Hi Tech's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.