Unfortunately for some shareholders, Guangzhou Seagull Kitchen & Bath Products Co., Ltd. (SZSE:002084) Shares have plummeted 26% in the past 30 days, lingering recent pain. Rather than being rewarded, shareholders who have already held in the past 12 months have now suffered a 45% share price decline.
Considering that the price-sales ratio (P/S) of about half of the companies operating in China's construction industry is more than 1.6 times, prices have fallen significantly, so Guangzhou Seagull's kitchen and bath products can be considered an attractive investment. The P/S ratio is 0.5x. However, there could be a reason for the low P/S, and further investigation is needed to determine if it's justified.
Check out the latest analysis on Guangzhou Seagull kitchen and bath products.
Guangzhou Seagull's kitchen and bath products track record
As an example, Guangzhou Seagull Kitchen & Bath Products' earnings have been deteriorating in the last year, which is not ideal at all. Perhaps many expect the disappointing earnings performance to continue or accelerate, which may be pushing down the bottom line. Those who are bullish on Guangzhou Gull's kitchen and bath products may wish otherwise and be able to pick up the stock at a lower valuation.
We don't have analyst forecasts, but checking our forecasts will tell you how recent trends are setting up the company's future. free Report on Guangzhou Seagull Kitchen & Bath Products' earnings, revenue and cash flow.
Are revenue projections consistent with low profit and loss margins?
To justify Guangzhou Seagull Kitchen & Bath Products' P/S ratio, it needs to produce weak growth that would put it behind the industry.
When I reviewed last year's financials, I was disappointed to see that our revenue declined by 21%. This means that earnings are falling over the long term as well, with earnings falling by a total of 5.5% over the past three years. So, unfortunately, we have to admit that the company hasn't done much to grow its revenue over that time.
When we weigh this medium-term revenue trajectory against the one-year forecast of 25% industry-wide expansion, we find that to be an unpleasant outlook.
Given this information, it's no surprise that Guangzhou Seagull Kitchen & Bathware is trading at a lower profit/loss than the industry. Nevertheless, there is no guarantee that P/S will still reach the lower bound and that returns will reverse. Just maintaining this price could be difficult, as recent earnings trends are already weighing on the stock.
Conclusion on Guangzhou Seagull Kitchen and Bath Products Revenue
Due to the recent decline in the stock price of Guangzhou Seagull Kitchen & Bath Products, its profit and loss was lower than that of other construction companies. Although it is not wise to use the price-to-sales ratio alone to decide whether to sell a stock, it can be a practical guide to a company's future prospects.
As we expected, our review of Guangzhou Seagull's kitchen and bath products indicates that medium-term revenue contraction is contributing to the decline in revenue, given the industry's expected growth. has become clear. For now, shareholders have accepted that future earnings probably won't bring pleasant surprises either, so they're accepting the lower earnings return. Given the current situation, we think the stock price is unlikely to move significantly in either direction in the near future, as long as recent medium-term earnings trends continue.
For example, you should be aware of the following risks: Guangzhou Seagull Kitchen and Bath Products has 2 warning signs (and a potentially serious one) that I think you should know about.
In these cases Risks make us reconsider our opinion about Guangzhou Seagull kitchen and bath productsexplore our interactive list of quality stocks to see what else is out there.
Valuation is complex, but we help make it simple.
Check out our comprehensive analysis, including below, to see if Guangzhou Seagull Kitchen and Bath Products is potentially overvalued or undervalued. Fair value estimates, risks and caveats, dividends, insider trading, and financial health.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
