LYC Healthcare Berhad (KLSE:LYC) Doing What It Can To Lift Shares

There wouldn't be many who think LYC Healthcare Berhad's (KLSE:LYC) price-to-sales (or "P/S") ratio of 0.9x is worth a mention when the median P/S for the IT industry in Malaysia is similar at about 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.

Check out our latest analysis for LYC Healthcare Berhad

How LYC Healthcare Berhad Has Been Performing

Recent times have been quite advantageous for LYC Healthcare Berhad as its revenue has been rising very briskly. Perhaps the market is expecting future revenue performance to taper off, which has kept the P/S from rising. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.

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

How Is LYC Healthcare Berhad's Revenue Growth Trending?

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

If we review the last year of revenue growth, the company posted a terrific increase of 40%. Spectacularly, three year revenue growth has ballooned by several orders of magnitude, thanks in part to the last 12 months of revenue growth. Accordingly, shareholders would have been over the moon with those medium-term rates of revenue growth.

When compared to the industry's one-year growth forecast of 9.9%, the most recent medium-term revenue trajectory is noticeably more alluring

With this information, we find it interesting that LYC Healthcare Berhad is trading at a fairly similar P/S compared to the industry. It may be that most investors are not convinced the company can maintain its recent growth rates.

The Key Takeaway

Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

We didn't quite envision LYC Healthcare Berhad's P/S sitting in line with the wider industry, considering the revenue growth over the last three-year is higher than the current industry outlook. There could be some unobserved threats to revenue preventing the P/S ratio from matching this positive performance. It appears some are indeed anticipating revenue instability, because the persistence of these recent medium-term conditions would normally provide a boost to the share price.

It's always necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with LYC Healthcare Berhad (at least 1 which is a bit unpleasant), and understanding them should be part of your investment process.

If you're unsure about the strength of LYC Healthcare 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.