Kinsus Interconnect Technology Corp.'s (TWSE:3189) Shares Leap 32% Yet They're Still Not Telling The Full Story

Kinsus Interconnect Technology Corp. (TWSE:3189) shares have had a really impressive month, gaining 32% after a shaky period beforehand. Notwithstanding the latest gain, the annual share price return of 7.2% isn't as impressive.

Even after such a large jump in price, Kinsus Interconnect Technology's price-to-sales (or "P/S") ratio of 2x might still make it look like a strong buy right now compared to the wider Semiconductor industry in Taiwan, where around half of the companies have P/S ratios above 4.1x and even P/S above 8x are quite common. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so limited.

View our latest analysis for Kinsus Interconnect Technology

What Does Kinsus Interconnect Technology's Recent Performance Look Like?

Recent times haven't been great for Kinsus Interconnect Technology as its revenue has been falling quicker than most other companies. It seems that many are expecting the dismal revenue performance to persist, which has repressed the P/S. If you still like the company, you'd want its revenue trajectory to turn around before making any decisions. If not, then existing shareholders will probably struggle to get excited about the future direction of the share price.

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

Is There Any Revenue Growth Forecasted For Kinsus Interconnect Technology?

There's an inherent assumption that a company should far underperform the industry for P/S ratios like Kinsus Interconnect Technology's to be considered reasonable.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 32%. The last three years don't look nice either as the company has shrunk revenue by 5.1% in aggregate. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

Turning to the outlook, the next year should generate growth of 27% as estimated by the ten analysts watching the company. With the industry predicted to deliver 27% growth , the company is positioned for a comparable revenue result.

With this in consideration, we find it intriguing that Kinsus Interconnect Technology's P/S is lagging behind its industry peers. Apparently some shareholders are doubtful of the forecasts and have been accepting lower selling prices.

The Key Takeaway

Shares in Kinsus Interconnect Technology have risen appreciably however, its P/S is still subdued. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

It looks to us like the P/S figures for Kinsus Interconnect Technology remain low despite growth that is expected to be in line with other companies in the industry. The low P/S could be an indication that the revenue growth estimates are being questioned by the market. Perhaps investors are concerned that the company could underperform against the forecasts over the near term.

And what about other risks? Every company has them, and we've spotted 1 warning sign for Kinsus Interconnect Technology you should know about.

If these risks are making you reconsider your opinion on Kinsus Interconnect Technology, 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