Why Are Investors Still Skeptical of Lincotrade & Associates Holdings Limited's (Catalist:BFT) Revenues, Despite a 46% Price Surge?

2023-09-04 14:35:30

Investors Remain Skeptical of Lincotrade & Associates Holdings Limited's (Catalist:BFT) Revenues Despite 46% Price Increase

The stock price of Lincotrade & Associates Holdings Limited (Catalist:BFT) has experienced a significant surge of 46% in the past month. While recent buyers may be celebrating this gain, long-term holders may not be as thrilled since the stock is now back to where it was a year ago.

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Despite the impressive price jump, investors are still hesitant due to the company's price-to-sales (P/S) ratio of 0.7x, which is higher than the median P/S ratio of 0.4x for the Construction industry in Singapore. This raises questions about the rationality and potential risks associated with the P/S ratio.

See our latest analysis for Lincotrade & Associates Holdings

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What is Lincotrade & Associates Holdings' Recent Performance?

Lincotrade & Associates Holdings has shown exceptionally strong revenue growth, which might explain the recent surge in stock price. However, if this growth doesn't continue, it could impact the P/S ratio and disappoint long-term shareholders.

Since there are no analyst estimates available for the company, it is recommended to view their free data-rich visualization to assess their earnings, revenue, and cash flow.

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What Can Revenue Growth Metrics Tell Us About the P/S Ratio?

Typically, a company's P/S ratio should align with the industry average for it to be considered reasonable. In the case of Lincotrade & Associates Holdings, it's interesting to note that despite their impressive revenue growth of 78% in the past year and 273% in the past three years, their P/S ratio remains similar to the industry average.

While the industry is expected to grow by only 21% in the next year, some shareholders anticipate revenue instability, leading them to accept lower selling prices for the stock.

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Final considerations

Although Lincotrade & Associates Holdings' stock price has rebounded and the P/S ratio is close to the industry median, relying solely on the P/S ratio to make investment decisions may not be prudent. Other factors should be considered, such as the company's future prospects and potential revenue threats.

It's important to acknowledge the existence of 3 warning signs for Lincotrade & Associates Holdings (2 that should not be overlooked). Considering profitable companies with a history of strong earnings growth could be a safer bet. Check out this collection of other companies with reasonable P/E ratios and strong earnings growth.

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