The Price Is Right For Sarawak Consolidated Industries Berhad (KLSE:SCIB) Even After Diving 27%

Sarawak Consolidated Industries Berhad (KLSE:SCIB) shares have retraced a considerable 27% in the last month, reversing a fair amount of their solid recent performance. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 27% share price drop.

Even after such a large drop in price, it's still not a stretch to say that Sarawak Consolidated Industries Berhad's price-to-sales (or "P/S") ratio of 0.8x right now seems quite "middle-of-the-road" compared to the Building industry in Malaysia, where the median P/S ratio is around 1.2x. 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.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

View our latest analysis for Sarawak Consolidated Industries Berhad

What Does Sarawak Consolidated Industries Berhad's Recent Performance Look Like?

Revenue has risen at a steady rate over the last year for Sarawak Consolidated Industries Berhad, which is generally not a bad outcome. One possibility is that the P/S is moderate because investors think this good revenue growth might only be parallel to the broader industry in the near future. Those who are bullish on Sarawak Consolidated Industries Berhad will be hoping that this isn't the case, so that they can pick up the stock at a lower valuation.

Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Sarawak Consolidated Industries Berhad will help you shine a light on its historical performance.

Is There Some Revenue Growth Forecasted For Sarawak Consolidated Industries Berhad?

The only time you'd be comfortable seeing a P/S like Sarawak Consolidated Industries Berhad's is when the company's growth is tracking the industry closely.

Retrospectively, the last year delivered a decent 5.6% gain to the company's revenues. Pleasingly, revenue has also lifted 37% in aggregate from three years ago, partly thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Comparing that to the industry, which is predicted to deliver 9.6% growth in the next 12 months, the company's momentum is pretty similar based on recent medium-term annualised revenue results.

In light of this, it's understandable that Sarawak Consolidated Industries Berhad's P/S sits in line with the majority of other companies. It seems most investors are expecting to see average growth rates continue into the future and are only willing to pay a moderate amount for the stock.

What We Can Learn From Sarawak Consolidated Industries Berhad's P/S?

Following Sarawak Consolidated Industries Berhad's share price tumble, its P/S is just clinging on to the industry median P/S. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

It appears to us that Sarawak Consolidated Industries Berhad maintains its moderate P/S off the back of its recent three-year growth being in line with the wider industry forecast. Right now shareholders are comfortable with the P/S as they are quite confident future revenue won't throw up any surprises. Unless the recent medium-term conditions change, they will continue to support the share price at these levels.

You need to take note of risks, for example - Sarawak Consolidated Industries Berhad has 4 warning signs (and 3 which shouldn't be ignored) we think you should know about.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.