With A 25% Price Drop For Coraza Integrated Technology Berhad (KLSE:CORAZA) You'll Still Get What You Pay For

The Coraza Integrated Technology Berhad (KLSE:CORAZA) share price has fared very poorly over the last month, falling by a substantial 25%. The recent drop has obliterated the annual return, with the share price now down 6.1% over that longer period.

In spite of the heavy fall in price, when almost half of the companies in Malaysia's Metals and Mining industry have price-to-sales ratios (or "P/S") below 0.5x, you may still consider Coraza Integrated Technology Berhad as a stock probably not worth researching with its 1.5x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the elevated P/S.

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Check out our latest analysis for Coraza Integrated Technology Berhad

What Does Coraza Integrated Technology Berhad's Recent Performance Look Like?

Coraza Integrated Technology Berhad certainly has been doing a good job lately as it's been growing revenue more than most other companies. It seems the market expects this form will continue into the future, hence the elevated P/S ratio. However, if this isn't the case, investors might get caught out paying too much for the stock.

Keen to find out how analysts think Coraza Integrated Technology Berhad's future stacks up against the industry? In that case, our free report is a great place to start.

Do Revenue Forecasts Match The High P/S Ratio?

The only time you'd be truly comfortable seeing a P/S as high as Coraza Integrated Technology Berhad's is when the company's growth is on track to outshine the industry.

Taking a look back first, we see that the company grew revenue by an impressive 73% last year. As a result, it also grew revenue by 8.2% in total over the last three years. So we can start by confirming that the company has actually done a good job of growing revenue over that time.

Looking ahead now, revenue is anticipated to climb by 8.2% during the coming year according to the three analysts following the company. With the industry only predicted to deliver 3.7%, the company is positioned for a stronger revenue result.

In light of this, it's understandable that Coraza Integrated Technology Berhad's P/S sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

What We Can Learn From Coraza Integrated Technology Berhad's P/S?

Despite the recent share price weakness, Coraza Integrated Technology Berhad's P/S remains higher than most other companies in the industry. 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.

Our look into Coraza Integrated Technology Berhad 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. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

There are also other vital risk factors to consider before investing and we've discovered 1 warning sign for Coraza Integrated Technology Berhad that you should be aware of.

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.

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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.