Market Participants Recognise RoboTechnik Intelligent Technology Co., LTD's (SZSE:300757) Revenues Pushing Shares 98% Higher

Simply Wall St · 10/17 23:07

The RoboTechnik Intelligent Technology Co., LTD (SZSE:300757) share price has done very well over the last month, posting an excellent gain of 98%. The last month tops off a massive increase of 237% in the last year.

Since its price has surged higher, given around half the companies in China's Machinery industry have price-to-sales ratios (or "P/S") below 2.7x, you may consider RoboTechnik Intelligent Technology as a stock to avoid entirely with its 14.8x P/S ratio. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.

See our latest analysis for RoboTechnik Intelligent Technology

ps-multiple-vs-industry
SZSE:300757 Price to Sales Ratio vs Industry October 17th 2024

What Does RoboTechnik Intelligent Technology's Recent Performance Look Like?

RoboTechnik Intelligent Technology certainly has been doing a great job lately as it's been growing its revenue at a really rapid pace. The P/S ratio is probably high because investors think this strong revenue growth will be enough to outperform the broader industry in the near future. However, if this isn't the case, investors might get caught out paying too much for the stock.

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

Is There Enough Revenue Growth Forecasted For RoboTechnik Intelligent Technology?

The only time you'd be truly comfortable seeing a P/S as steep as RoboTechnik Intelligent Technology's is when the company's growth is on track to outshine the industry decidedly.

If we review the last year of revenue growth, the company posted a terrific increase of 41%. Pleasingly, revenue has also lifted 121% in aggregate from three years ago, thanks to the last 12 months of growth. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Comparing that recent medium-term revenue trajectory with the industry's one-year growth forecast of 23% shows it's noticeably more attractive.

In light of this, it's understandable that RoboTechnik Intelligent Technology's P/S sits above the majority of other companies. It seems most investors are expecting this strong growth to continue and are willing to pay more for the stock.

What Does RoboTechnik Intelligent Technology's P/S Mean For Investors?

Shares in RoboTechnik Intelligent Technology have seen a strong upwards swing lately, which has really helped boost its P/S figure. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

We've established that RoboTechnik Intelligent Technology maintains its high P/S on the strength of its recent three-year growth being higher than the wider industry forecast, as expected. Right now shareholders are comfortable with the P/S as they are quite confident revenue aren't under threat. Unless the recent medium-term conditions change, they will continue to provide strong support to the share price.

And what about other risks? Every company has them, and we've spotted 3 warning signs for RoboTechnik Intelligent Technology you should know about.

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).