Unfortunately for some shareholders, the recent pain has dragged on, with Whole Shine Medical Technology Co., Ltd.’s (SZSE:002622) share price falling 27% in the last 30 days. The recent decline caps a disastrous 12 months for shareholders, who have suffered a loss of 63% in that time.
Despite the large share price decline, many would not find it noteworthy that Wholeshine Medical Technology’s price-to-sales ratio (P/S) of 1.3x is roughly in line with the median P/S for the China healthcare industry. This may not be particularly surprising, but when the P/S ratio is not justified, investors could be missing out on potential opportunities or ignoring looming disappointments.
Check out our latest analysis for Hallshine Medical Technology
SZSE:002622 Sales Price Ratio by Industry July 21, 2024
What does Whole Shine Medical Technology’s P/S mean for shareholders?
Wholeshine Medical Technology has certainly been doing well recently, with earnings growing rapidly. The market is expecting future earnings performance to slowly decline, which is why the P/S hasn’t risen. Those who are bullish on Wholeshine Medical Technology are hoping that isn’t the case and could buy the stock at a lower valuation.
There are no analyst forecasts for Whole Shine Medical Technology, but you can take a look at this free data-rich visualization to see the company’s earnings, revenue and cash flow picture.
Is Whole Shine Medical Technology’s revenue growth predicted?
There is an inherent assumption that for a P/S ratio like Whole Shine Medical Technology’s to be considered reasonable, a company needs to be comparable to its industry.
Looking back at revenue growth over the last year, the company recorded a staggering 44% growth. What’s surprising is that, coupled with revenue growth in the last 12 months, the three-year revenue growth has ballooned by an order of magnitude. Therefore, shareholders will likely be thrilled with the medium-term revenue growth rate.
Compared to the industry, which is only expected to grow 15% over the next 12 months, the company’s momentum is stronger based on recent mid-year annual earnings results.
With this in mind, it’s interesting to see that Whole Shine Medical Technology’s P/S is in line with the majority of other companies, as most investors may not be convinced the company can sustain its recent growth rate.
What can we learn from Whole Shine Medical Technology’s P/S?
Holeshine Medical Technology’s share price has fallen sharply, bringing its P/S ratio back into line with the rest of the industry. While it’s not wise to use the price-to-sales ratio alone to decide whether or not to sell a stock, it can be a practical indicator of the company’s future prospects.
Given that earnings growth over the past three years has been higher than current industry expectations, we would not expect Whole Shine Medical Technology’s P/S to be in line with the broader industry. It’s possible that some unobserved threats to earnings could be preventing the P/S ratio from matching this strong performance. If the recent medium-term earnings trend continues, the risk of a price downturn at least looks contained, although investors seem to think that future earnings could see some volatility.
You should also be aware of the 2 warning signs we’ve spotted with Whole Shine Medical Technology (including 1 which is a bit concerning)
If you like companies with a history of strong earnings growth, then you may want to check out this free collection of other companies with high earnings growth and low P/E ratios.
Valuation is complicated, but we can help make it simple.
Find out if Whole Shine Medical Technology is overvalued or undervalued by checking our comprehensive analysis, including fair value estimates, risks and warnings, dividends, insider transactions, financials and more.
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This article by Simply Wall St is of general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives or financial situation. We aim to provide long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned herein.
Valuation is complicated, but we can help make it simple.
Find out if Whole Shine Medical Technology is overvalued or undervalued by checking our comprehensive analysis, including fair value estimates, risks and warnings, dividends, insider transactions, financials and more.
View free analysis
Have something to say about this article? If you have any questions about the content, please contact us directly or email us at editorial-team@simplywallst.com.
