CSC Holdings Limited (SGX:C06) shares have continued their recent momentum with a 27% gain in the last month alone. Looking back a bit further, it's encouraging to see the stock is up 100% in the last year.
Although its price has surged higher, when close to half the companies operating in Singapore's Construction industry have price-to-sales ratios (or "P/S") above 0.7x, you may still consider CSC Holdings as an enticing stock to check out with its 0.1x P/S ratio. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.
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See our latest analysis for CSC Holdings
Revenue has risen firmly for CSC Holdings recently, which is pleasing to see. Perhaps the market is expecting this acceptable revenue performance to take a dive, which has kept the P/S suppressed. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.
Although there are no analyst estimates available for CSC Holdings, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.There's an inherent assumption that a company should underperform the industry for P/S ratios like CSC Holdings' to be considered reasonable.
Taking a look back first, we see that the company managed to grow revenues by a handy 11% last year. The latest three year period has also seen a 26% overall rise in revenue, aided somewhat by its short-term performance. Accordingly, shareholders would have probably been satisfied with the medium-term rates of revenue growth.
It's interesting to note that the rest of the industry is similarly expected to grow by 8.6% over the next year, which is fairly even with the company's recent medium-term annualised growth rates.
In light of this, it's peculiar that CSC Holdings' P/S sits below the majority of other companies. Apparently some shareholders are more bearish than recent times would indicate and have been accepting lower selling prices.
CSC Holdings' stock price has surged recently, but its but its P/S still remains modest. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.
Our examination of CSC Holdings revealed its three-year revenue trends looking similar to current industry expectations hasn't given the P/S the boost we expected, given that it's lower than the wider industry P/S, There could be some unobserved threats to revenue preventing the P/S ratio from matching the company's performance. medium-term
And what about other risks? Every company has them, and we've spotted 4 warning signs for CSC Holdings (of which 1 is a bit unpleasant!) you should know about.
If you're unsure about the strength of CSC Holdings' 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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