Getting In Cheap On Coraza Integrated Technology Berhad (KLSE:CORAZA) Might Be Difficult

When close to half the companies in the Metals and Mining industry in Malaysia have price-to-sales ratios (or "P/S") below 0.5x, you may consider Coraza Integrated Technology Berhad (KLSE:CORAZA) as a stock to potentially avoid with its 2.4x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the elevated P/S.

Check out our latest analysis for Coraza Integrated Technology Berhad

What Does Coraza Integrated Technology Berhad's P/S Mean For Shareholders?

Coraza Integrated Technology Berhad hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. One possibility is that the P/S ratio is high because investors think this poor revenue performance will turn the corner. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

Want the full picture on analyst estimates for the company? Then our free report on Coraza Integrated Technology Berhad will help you uncover what's on the horizon.

Do Revenue Forecasts Match The High P/S Ratio?

The only time you'd be truly comfortable seeing a P/S as high as Coraza Integrated Technology Berhad's is when the company's growth is on track to outshine the industry.

Retrospectively, the last year delivered a frustrating 41% decrease to the company's top line. As a result, revenue from three years ago have also fallen 13% overall. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.

Shifting to the future, estimates from the three analysts covering the company suggest revenue should grow by 45% over the next year. Meanwhile, the rest of the industry is forecast to only expand by 6.5%, which is noticeably less attractive.

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

The Bottom Line On Coraza Integrated Technology Berhad's P/S

While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

Our look into Coraza Integrated Technology Berhad shows that its P/S ratio remains high on the merit of its strong future revenues. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. Unless these conditions change, they will continue to provide strong support to the share price.

You should always think about risks. Case in point, we've spotted 1 warning sign for Coraza Integrated Technology Berhad you should be aware of.

If you're unsure about the strength of Coraza Integrated Technology Berhad's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.