Positive Sentiment Still Eludes Wireless Power Amplifier Module Inc. (KOSDAQ:332570) Following 27% Share Price Slump

Wireless Power Amplifier Module Inc. (KOSDAQ:332570) shares have retraced a considerable 27% 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 8.6% over the last twelve months.

Although its price has dipped substantially, it's still not a stretch to say that Wireless Power Amplifier Module's price-to-sales (or "P/S") ratio of 1.1x 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. 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.

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See our latest analysis for Wireless Power Amplifier Module

What Does Wireless Power Amplifier Module's P/S Mean For Shareholders?

Wireless Power Amplifier Module 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 taper off, which has kept the P/S from rising. If that doesn't eventuate, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

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 Wireless Power Amplifier Module's earnings, revenue and cash flow.

How Is Wireless Power Amplifier Module's Revenue Growth Trending?

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

If we review the last year of revenue growth, the company posted a terrific increase of 79%. Pleasingly, revenue has also lifted 104% in aggregate from three years ago, thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing revenue over that time.

Comparing that to the industry, which is only predicted to deliver 7.6% 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 Wireless Power Amplifier Module's P/S sits in line with the majority of other companies. It may be that most investors are not convinced the company can maintain its recent growth rates.

What Does Wireless Power Amplifier Module's P/S Mean For Investors?

Following Wireless Power Amplifier Module's share price tumble, its P/S is just clinging on to the industry median P/S. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

We've established that Wireless Power Amplifier Module currently trades on a lower than expected P/S since its recent three-year growth is higher than the wider industry forecast. There could be some unobserved threats to revenue preventing the P/S ratio from matching this positive performance. At least the risk of a price drop looks to be subdued if recent medium-term revenue trends continue, but investors seem to think future revenue could see some volatility.

You should always think about risks. Case in point, we've spotted 2 warning signs for Wireless Power Amplifier Module you should be aware of, and 1 of them is concerning.

It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).

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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.