Some HLT Global Berhad (KLSE:HLT) Shareholders Look For Exit As Shares Take 29% Pounding

Simply Wall St · 10/17 23:01

Unfortunately for some shareholders, the HLT Global Berhad (KLSE:HLT) share price has dived 29% in the last thirty days, prolonging recent pain. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 29% in that time.

Even after such a large drop in price, you could still be forgiven for feeling indifferent about HLT Global Berhad's P/S ratio of 1.7x, since the median price-to-sales (or "P/S") ratio for the Machinery industry in Malaysia is about the same. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

Check out our latest analysis for HLT Global Berhad

ps-multiple-vs-industry
KLSE:HLT Price to Sales Ratio vs Industry October 17th 2024

What Does HLT Global Berhad's Recent Performance Look Like?

For instance, HLT Global Berhad's receding revenue in recent times would have to be some food for thought. Perhaps investors believe the recent revenue performance is enough to keep in line with the industry, which is keeping the P/S from dropping off. If not, then existing shareholders may be a little nervous about the viability of the share price.

Want the full picture on earnings, revenue and cash flow for the company? Then our free report on HLT Global Berhad will help you shine a light on its historical performance.

Is There Some Revenue Growth Forecasted For HLT Global Berhad?

There's an inherent assumption that a company should be matching the industry for P/S ratios like HLT Global Berhad'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 6.4%. This means it has also seen a slide in revenue over the longer-term as revenue is down 84% in total over the last three years. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

Comparing that to the industry, which is predicted to deliver 15% growth in the next 12 months, the company's downward momentum based on recent medium-term revenue results is a sobering picture.

With this information, we find it concerning that HLT Global Berhad is trading at a fairly similar P/S compared to the industry. It seems most investors are ignoring the recent poor growth rate and are hoping for a turnaround in the company's business prospects. Only the boldest would assume these prices are sustainable as a continuation of recent revenue trends is likely to weigh on the share price eventually.

What Does HLT Global Berhad's P/S Mean For Investors?

With its share price dropping off a cliff, the P/S for HLT Global Berhad looks to be in line with the rest of the Machinery industry. 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.

The fact that HLT Global Berhad currently trades at a P/S on par with the rest of the industry is surprising to us since its recent revenues have been in decline over the medium-term, all while the industry is set to grow. When we see revenue heading backwards in the context of growing industry forecasts, it'd make sense to expect a possible share price decline on the horizon, sending the moderate P/S lower. If recent medium-term revenue trends continue, it will place shareholders' investments at risk and potential investors in danger of paying an unnecessary premium.

You need to take note of risks, for example - HLT Global Berhad has 4 warning signs (and 1 which can't be ignored) we think you should know about.

It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).