After Leaping 29% Coraza Integrated Technology Berhad (KLSE:CORAZA) Shares Are Not Flying Under The Radar

Those holding Coraza Integrated Technology Berhad (KLSE:CORAZA) shares would be relieved that the share price has rebounded 29% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 15% over that time.

Following the firm bounce in price, you could be forgiven for thinking Coraza Integrated Technology Berhad is a stock not worth researching with a price-to-sales ratios (or "P/S") of 2.1x, considering almost half the companies in Malaysia's Metals and Mining industry have P/S ratios below 0.5x. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the elevated P/S.

We've discovered 2 warning signs about Coraza Integrated Technology Berhad. View them for free.

View our latest analysis for Coraza Integrated Technology Berhad

How Has Coraza Integrated Technology Berhad Performed Recently?

Coraza Integrated Technology Berhad certainly has been doing a good job lately as it's been growing revenue more than most other companies. The P/S is probably high because investors think this strong revenue performance will continue. However, if this isn't the case, investors might get caught out paying too much for the stock.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Coraza Integrated Technology Berhad.

Is There Enough Revenue Growth Forecasted For Coraza Integrated Technology Berhad?

In order to justify its P/S ratio, Coraza Integrated Technology Berhad would need to produce impressive growth in excess of the industry.

If we review the last year of revenue growth, the company posted a terrific increase of 35%. Although, its longer-term performance hasn't been as strong with three-year revenue growth being relatively non-existent overall. Accordingly, shareholders probably wouldn't have been overly satisfied with the unstable medium-term growth rates.

Turning to the outlook, the next three years should generate growth of 22% per year as estimated by the two analysts watching the company. With the industry only predicted to deliver 3.3% each year, the company is positioned for a stronger revenue result.

With this in mind, it's not hard to understand why Coraza Integrated Technology Berhad's P/S is high relative to its industry peers. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Key Takeaway

Coraza Integrated Technology Berhad shares have taken a big step in a northerly direction, but its P/S is elevated as a result. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

We've established that Coraza Integrated Technology Berhad maintains its high P/S on the strength of its forecasted revenue growth being higher than the the rest of the Metals and Mining industry, as expected. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

Plus, you should also learn about these 2 warning signs we've spotted with Coraza Integrated Technology Berhad.

If you're unsure about the strength of Coraza Integrated Technology Berhad'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.