Market Cool On Autozi Internet Technology (Global) Ltd.'s (NASDAQ:AZI) Revenues Pushing Shares 34% Lower

To the annoyance of some shareholders, Autozi Internet Technology (Global) Ltd. (NASDAQ:AZI) shares are down a considerable 34% in the last month, which continues a horrid run for the company. To make matters worse, the recent drop has wiped out a year's worth of gains with the share price now back where it started a year ago.

In spite of the heavy fall in price, there still wouldn't be many who think Autozi Internet Technology (Global)'s price-to-sales (or "P/S") ratio of 0.2x is worth a mention when the median P/S in the United States' Specialty Retail industry is similar at about 0.4x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

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Check out our latest analysis for Autozi Internet Technology (Global)

What Does Autozi Internet Technology (Global)'s P/S Mean For Shareholders?

Autozi Internet Technology (Global) has been doing a good job lately as it's been growing revenue at a solid pace. One possibility is that the P/S is moderate because investors think this respectable revenue growth might not be enough to outperform the broader industry in the near future. If that doesn't eventuate, then existing shareholders probably aren't too pessimistic about the future direction of the share price.

Although there are no analyst estimates available for Autozi Internet Technology (Global), take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.

How Is Autozi Internet Technology (Global)'s Revenue Growth Trending?

There's an inherent assumption that a company should be matching the industry for P/S ratios like Autozi Internet Technology (Global)'s to be considered reasonable.

Retrospectively, the last year delivered a decent 9.9% gain to the company's revenues. The latest three year period has also seen an excellent 86% overall rise in revenue, aided somewhat by its short-term performance. So we can start by confirming that the company has done a great job of growing revenues over that time.

Comparing that to the industry, which is only predicted to deliver 5.7% growth in the next 12 months, the company's momentum is stronger based on recent medium-term annualised revenue results.

In light of this, it's curious that Autozi Internet Technology (Global)'s P/S sits in line with the majority of other companies. Apparently some shareholders believe the recent performance is at its limits and have been accepting lower selling prices.

What Does Autozi Internet Technology (Global)'s P/S Mean For Investors?

Following Autozi Internet Technology (Global)'s share price tumble, its P/S is just clinging on to the industry median P/S. 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.

We didn't quite envision Autozi Internet Technology (Global)'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. At least the risk of a price drop looks to be subdued if recent medium-term revenue trends continue, but investors seem to think future revenue could see some volatility.

Before you settle on your opinion, we've discovered 3 warning signs for Autozi Internet Technology (Global) (2 are a bit unpleasant!) that 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.