Optimistic investors lift Googol Technology Co., Ltd. (SZSE:301510) stock 26%, but growth is lacking

person who has Googlel Technology Co., Ltd. (SZSE:301510)'s stock price has rebounded 26% in the past 30 days, which should be reassuring, but it needs to continue repairing the recent damage it has done to investors' portfolios. Long-term shareholders will likely appreciate a recovery in the stock price, as it has been mostly flat for a year since its recent rise.

At a time when almost half of the companies in China's electronics industry have price/sales (P/S) ratios below 3.7x due to a rebound in corporate prices, we consider Google Technology a stock not worth researching at 37.7x. maybe. ×P/S ratio. However, there may be a reason why the P/S is so high, and further research is needed to determine if it's justified.

Check out our latest analysis for Google Technology.

How has Google Technology performed recently?

Google's revenue growth seems to be losing out to Google recently, which is nothing to brag about. Perhaps the market believes that earnings growth will improve significantly from current levels and the P/S ratio will rise. If you don't hope so, you will end up paying a very high price for no particular reason.

We don't have analyst forecasts, but checking our forecasts will tell you how recent trends are setting up the company's future. free Reports on Google's earnings, revenue, and cash flow.

Does Googlel Technology have sufficient revenue growth forecast?

Googlel Technology's P/S ratio is typical of a company that is expected to deliver very strong growth and, importantly, outperform its industry by far.

First, looking back, the company's revenue growth has been negligible over the past year. Still, the most recent three years were better, as overall he achieved a decent revenue increase of 22%. Therefore, shareholders would not have been too happy with the unstable medium-term growth rate.

Comparing recent medium-term earnings trends to the industry's forecast growth of 26% over the next 12 months, we find that they look significantly less attractive.

With this in mind, it's concerning that Googlel Technology's P/S is higher than most other companies. Apparently, many of the company's investors are much more bullish than recent expectations and are unwilling to exit the stock at any price. If the P/S drops to a level commensurate with recent growth rates, there's a good chance existing shareholders are setting themselves up for future disappointment.

What does Googlel Technology's P/S mean for investors?

Due to the strong rise in the stock price, Googlel Technology's earnings also skyrocketed. Generally, we prefer to limit the use of price-to-sales ratios to establish what the market thinks about a company's overall health.

The fact that Googlel Technology is currently trading at a high P/S relative to its industry is strange, as its growth rate over the last three years has been lower than the overall industry expectations. If we observe slower earnings growth and a higher P/S ratio than the industry, we believe there is a significant risk of share price decline, resulting in a lower P/S ratio. If recent medium-term earnings trends continue, shareholders' investments will be at significant risk and potential investors will be at risk of paying an excessive premium.

There are other important risk factors to consider, and we've found them. 3 warning signs for Google Technology (1 is a little off-putting!) You should be careful before investing here.

of course, Profitable companies that have a history of strong revenue growth are generally safer choices..So you might want to see this free A collection of other companies with reasonable P/E ratios and strong earnings growth.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, 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.