Deir Al-Mustaqbal Group for Science and Technology Holding Company Limited (SZSE:002631) Shareholders are no doubt pleased to see the share price up 29% in the last month, although it is still struggling to make up ground recently. Not all shareholders will be rejoicing, as the share price is still down a very disappointing 22% in the last twelve months.
Despite the strong price bounce, you could still be forgiven for feeling indifferent to Der Future Science and Technology Holding Group's price-to-earnings ratio of 1.7x, given that the average price-to-sales (or “P/S”) ratio ) for China's construction industry is almost the same. Although it is not wise to simply ignore P&L without explanation, as investors may be overlooking a distinct opportunity or a costly mistake.
View our latest analysis for Deer Future Science and Technology Holding Group
What does the recent performance of Deer Future Science and Technology Holding Group look like?
For example, revenues at Deer Future Science and Technology Holding Group deteriorated over the past year, which is not ideal at all. One possibility is for the P/E to moderate because investors believe the company may still be doing enough to keep pace with the broader industry in the near future. If you like the company, you at least hope that's the case so you can buy some shares while it's not completely in your favor.
Although there are no analyst estimates available for Der Future Science and Technology Holding Group, take a look at this free Data-rich visualization to see how a company compiles earnings, revenue, and cash flow.
How is Deer Future Science and Technology Holding Group’s revenue growth trending?
Der Future Science and Technology Holding Group's P/E ratio would be typical of a company that is only expected to deliver moderate growth and, more importantly, perform in line with the industry.
Retrospectively, last year delivered a dispiriting 9.4% decline in the company's bottom line. This has dampened the good performance it had been having over the long term, with its revenue growth over three years still notable at 20% in total. Accordingly, although they would have preferred to continue on this path, shareholders would have been more or less satisfied with revenue growth rates in the medium term.
Comparing recent medium-term revenue trends with the industry's one-year growth forecast of 25% shows that it is significantly less attractive.
With this information, we find it interesting that Der Future Science and Technology Holding Group is trading at a fairly similar P/E compared to the industry. Clearly, many investors in the company are less pessimistic than recent times suggest and are not willing to part with their shares at the moment. Maintaining these prices will be difficult as a continuation of recent revenue trends will likely put pressure on the stock eventually.
Bottom line on the P/S of Der Future Science and Technology Holding Group
Its shares have risen significantly and now the P/E of Der Future Science and Technology Holding Group is back in the industry average range. In general, we prefer to limit the use of the price-to-sales ratio to determine what the market thinks about the overall health of a company.
Our examination of Der Future Science and Technology Holding Group reveals that its weak three-year revenue trends do not lead to a lower P/E than we would expect, since they look worse than current industry expectations. When we see weak revenues with slower growth than the industry, we suspect that the stock price is at risk of decline, bringing the P/E in line with expectations. Unless there is a significant improvement in the company's performance in the medium term, it will be difficult to prevent the price-to-earnings ratio from falling to a more reasonable level.
You should always consider the risks. Case in point, we've spotted 2 warning signs for Deir Al-Mustaqbal Science and Technology Holding Group You should be aware of them, and one of them is important.
It is important to Make sure you're looking for a great company, not just the first idea you come across. So, if increased profitability matches your idea of a great company, take a peek at this free A list of interesting companies with recent strong earnings growth (and a low P/E).
Evaluation is complex, but we help simplify it.
Find out if Der Future Science and Technology Holding Group may be overvalued or undervalued by checking out our comprehensive analysis, which includes: Fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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This article written by Simply Wall St is general in nature. We provide comments based on historical data and analyst forecasts only using 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 into account your objectives or financial situation. We aim to offer you focused, long-term analysis driven by fundamental data. Note that our analysis may not take into account the company's most recent price-sensitive announcements or qualitative materials. Simply put, Wall St has no position in any of the stocks mentioned.
