A Piece Of The Puzzle Missing From EZGO Technologies Ltd.'s (NASDAQ:EZGO) Share Price

EZGO Technologies Ltd. -10.19% Pre

EZGO Technologies Ltd.

EZGO

1.85

1.80

-10.19%

-2.70% Pre

With a price-to-sales (or "P/S") ratio of 0.5x EZGO Technologies Ltd. (NASDAQ:EZGO) may be sending very bullish signals at the moment, given that almost half of all the Auto companies in the United States have P/S ratios greater than 4.5x and even P/S higher than 10x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly reduced P/S.

Check out our latest analysis for EZGO Technologies

ps-multiple-vs-industry
NasdaqCM:EZGO Price to Sales Ratio vs Industry December 29th 2023

How Has EZGO Technologies Performed Recently?

For example, consider that EZGO Technologies' financial performance has been poor lately as its revenue has been in decline. Perhaps the market believes the recent revenue performance isn't good enough to keep up the industry, causing the P/S ratio to suffer. Those who are bullish on EZGO Technologies will be hoping that this isn't the case so that they can pick up the stock at a lower valuation.

We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on EZGO Technologies' earnings, revenue and cash flow.

Do Revenue Forecasts Match The Low P/S Ratio?

EZGO Technologies' P/S ratio would be typical for a company that's expected to deliver very poor growth or even falling revenue, and importantly, perform much worse than the industry.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 19%. However, a few very strong years before that means that it was still able to grow revenue by an impressive 123% in total over the last three years. So we can start by confirming that the company has generally done a very good job of growing revenue over that time, even though it had some hiccups along the way.

It's interesting to note that the rest of the industry is similarly expected to grow by 30% over the next year, which is fairly even with the company's recent medium-term annualised growth rates.

With this in consideration, we find it intriguing that EZGO Technologies' P/S falls short of its industry peers. It may be that most investors are not convinced the company can maintain recent growth rates.

What We Can Learn From EZGO Technologies' P/S?

While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

Our examination of EZGO Technologies 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

We don't want to rain on the parade too much, but we did also find 5 warning signs for EZGO Technologies (4 are concerning!) that you need to be mindful of.

It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).

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