Crescendo Corporation Berhad's (KLSE:CRESNDO) Shares Leap 28% Yet They're Still Not Telling The Full Story

The Crescendo Corporation Berhad (KLSE:CRESNDO) share price has done very well over the last month, posting an excellent gain of 28%. The last month tops off a massive increase of 240% in the last year.

Although its price has surged higher, you could still be forgiven for feeling indifferent about Crescendo Corporation Berhad's P/S ratio of 1.6x, since the median price-to-sales (or "P/S") ratio for the Real Estate industry in Malaysia is also close to 1.8x. 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.

Check out our latest analysis for Crescendo Corporation Berhad

What Does Crescendo Corporation Berhad's Recent Performance Look Like?

With revenue growth that's exceedingly strong of late, Crescendo Corporation Berhad has been doing very well. Perhaps the market is expecting future revenue performance to taper off, which has kept the P/S from rising. Those who are bullish on Crescendo Corporation Berhad will be hoping that this isn't the case, so that they can pick up the stock at a lower valuation.

Although there are no analyst estimates available for Crescendo Corporation Berhad, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.

What Are Revenue Growth Metrics Telling Us About The P/S?

There's an inherent assumption that a company should be matching the industry for P/S ratios like Crescendo Corporation Berhad's to be considered reasonable.

Retrospectively, the last year delivered an explosive gain to the company's top line. The amazing performance means it was also able to grow revenue by 235% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Comparing that recent medium-term revenue trajectory with the industry's one-year growth forecast of 9.5% shows it's noticeably more attractive.

In light of this, it's curious that Crescendo Corporation Berhad'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 Crescendo Corporation Berhad's P/S Mean For Investors?

Its shares have lifted substantially and now Crescendo Corporation Berhad's P/S is back within range of the industry median. 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 Crescendo Corporation Berhad currently trades on a lower than expected P/S since its recent three-year growth is higher than the wider industry forecast. It'd be fair to assume that potential risks the company faces could be the contributing factor to the lower than expected P/S. While recent revenue trends over the past medium-term suggest that the risk of a price decline is low, investors appear to see the likelihood of revenue fluctuations in the future.

The company's balance sheet is another key area for risk analysis. You can assess many of the main risks through our free balance sheet analysis for Crescendo Corporation Berhad with six simple checks.

If these risks are making you reconsider your opinion on Crescendo Corporation Berhad, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.

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