Investors Still Aren't Entirely Convinced By Greenland Technologies Holding Corporation's (NASDAQ:GTEC) Revenues Despite 25% Price Jump

Greenland Technologies Holding Corporation (NASDAQ:GTEC) shareholders are no doubt pleased to see that the share price has bounced 25% in the last month, although it is still struggling to make up recently lost ground. Notwithstanding the latest gain, the annual share price return of 4.1% isn't as impressive.

Although its price has surged higher, considering around half the companies operating in the United States' Machinery industry have price-to-sales ratios (or "P/S") above 1.5x, you may still consider Greenland Technologies Holding as an solid investment opportunity with its 0.3x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

View our latest analysis for Greenland Technologies Holding

How Has Greenland Technologies Holding Performed Recently?

Greenland Technologies Holding's revenue growth of late has been pretty similar to most other companies. Perhaps the market is expecting future revenue performance to dive, which has kept the P/S suppressed. Those who are bullish on Greenland Technologies Holding will be hoping that this isn't the case.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Greenland Technologies Holding.

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

Greenland Technologies Holding's P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.

Taking a look back first, we see that the company managed to grow revenues by a handy 8.6% last year. The solid recent performance means it was also able to grow revenue by 11% 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.

Turning to the outlook, the next year should generate growth of 23% as estimated by the lone analyst watching the company. That's shaping up to be materially higher than the 1.6% growth forecast for the broader industry.

With this information, we find it odd that Greenland Technologies Holding is trading at a P/S lower than the industry. It looks like most investors are not convinced at all that the company can achieve future growth expectations.

What We Can Learn From Greenland Technologies Holding's P/S?

Despite Greenland Technologies Holding's share price climbing recently, its P/S still lags most other companies. 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.

A look at Greenland Technologies Holding's revenues reveals that, despite glowing future growth forecasts, its P/S is much lower than we'd expect. There could be some major risk factors that are placing downward pressure on the P/S ratio. While the possibility of the share price plunging seems unlikely due to the high growth forecasted for the company, the market does appear to have some hesitation.

You should always think about risks. Case in point, we've spotted 3 warning signs for Greenland Technologies Holding you should be aware of.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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