Shenzhen Xinyichang Technology Co., Ltd. (SHSE:688383) Still lacks positive sentiment after stock price declines 25%

We apologize for the inconvenience caused to some shareholders, but Shenzhen Xinyichang Technology Co., Ltd. (SHSE:688383)'s stock price has fallen by a significant 25% in the last month, and the company's poor management continues. For long-term shareholders, the final month marks the end of an unforgettable year for him as the stock price falls by 55%.

Despite the significant drop in prices, it's no exaggeration to say that Shenzhen Xinyichang Technology's current price-to-sales (or “P/S”) ratio of 5.5 times looks quite “middle of the road.” Compared to China's semiconductor industry, the median P/S ratio is approximately 5.8x. However, without a rational basis for the P/S, investors may miss obvious opportunities or potential setbacks.

Check out our latest analysis for Shenzhen Xinyichang Technology.

Shenzhen Xinyichang Technology's Achievements

Although the industry has recently seen an increase in revenue, Shenzhen Xinyichang Technology's revenue is in reverse rotation and is not very large. The market is probably hoping that the poor performance will improve and prevent the P/S from declining. If so, you'll be paying a relatively high price for a company with this kind of growth profile.

Want to know how analysts think Shenzhen Xinyichang Technology's future compares to the industry? If so, we've got you covered. free Reports are a great place to start.

Does the earnings forecast match the P/S ratio?

There is an inherent assumption that for a profit and loss ratio like Shenzhen Xinyichang Technology's to be considered reasonable, a company must achieve a profit and loss ratio comparable to the industry.

When I reviewed last year's financials, I was disappointed to see that our revenue declined by 12%. Still, despite the past 12 months, revenues have impressively increased by a total of 48% compared to his three years ago. So, while shareholders would have liked to see a continuation of the performance, they would no doubt welcome medium-term earnings growth.

Turning to the outlook, 3 analysts who follow the company estimate that the stock is expected to grow 57% next year. The company is in a position to expect stronger returns, as the industry predicts he will only deliver 34%.

With this information, we find it interesting that Shenzhen Xinyichang Technology is trading on a similar P/L compared to its industry. Perhaps most investors are not convinced that the company can achieve its future growth expectations.

Conclusion on Shenzhen Xinyichang Technology's profit and loss

Due to the sharp decline in Shenzhen Xinyichang Technology's stock price, the company's profit and loss are sticking to the industry's median profit and loss. Generally, we prefer to limit the use of price-to-sales ratios to establish what the market thinks about a company's overall health.

Despite attractive revenue growth rates that outpace the industry, Shenzhen Xinyichang Technology's P&L are not as strong as we would expect. There may be some risks that the market is pricing in, which prevents the P/S ratio from matching the positive outlook. This uncertainty seems to be reflected in the stock price, which has held steady, but could rise further given the earnings forecast.

Before you form your own opinion, here's what we found. 2 warning signs for Shenzhen Xinyichang Technology (1 is a little off-putting!) Be careful with this.

In these cases Risks force us to reconsider our opinion about Shenzhen Xinyichang Technologyexplore our interactive list of quality stocks to see what else is out there.

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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.