The KYOTO KIMONO YUZEN HOLDINGS Co., Ltd. (TSE:7615) share price has fared very poorly over the last month, falling by a substantial 26%. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 58% loss during that time.
In spite of the heavy fall in price, it’s still not a stretch to say that KYOTO KIMONO YUZEN HOLDINGS’ price-to-sales (or “P/S”) ratio of 0.2x right now seems quite “middle-of-the-road” compared to the Specialty Retail industry in Japan, where the median P/S ratio is around 0.3x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.
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TSE:7615 Price to Sales Ratio vs Industry April 7th 2025 How Has KYOTO KIMONO YUZEN HOLDINGS Performed Recently?
As an illustration, revenue has deteriorated at KYOTO KIMONO YUZEN HOLDINGS over the last year, which is not ideal at all. Perhaps investors believe the recent revenue performance is enough to keep in line with the industry, which is keeping the P/S from dropping off. If not, then existing shareholders may be a little nervous about the viability of the share price.
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on KYOTO KIMONO YUZEN HOLDINGS will help you shine a light on its historical performance. Do Revenue Forecasts Match The P/S Ratio?
KYOTO KIMONO YUZEN HOLDINGS’ P/S ratio would be typical for a company that’s only expected to deliver moderate growth, and importantly, perform in line with the industry.
In reviewing the last year of financials, we were disheartened to see the company’s revenues fell to the tune of 17%. This means it has also seen a slide in revenue over the longer-term as revenue is down 29% in total over the last three years. Therefore, it’s fair to say the revenue growth recently has been undesirable for the company.
In contrast to the company, the rest of the industry is expected to grow by 8.0% over the next year, which really puts the company’s recent medium-term revenue decline into perspective.
In light of this, it’s somewhat alarming that KYOTO KIMONO YUZEN HOLDINGS’ P/S sits in line with the majority of other companies. Apparently many investors in the company are way less bearish than recent times would indicate and aren’t willing to let go of their stock right now. There’s a good chance existing shareholders are setting themselves up for future disappointment if the P/S falls to levels more in line with the recent negative growth rates.
What Does KYOTO KIMONO YUZEN HOLDINGS’ P/S Mean For Investors?
Following KYOTO KIMONO YUZEN HOLDINGS’ share price tumble, its P/S is just clinging on to the industry median P/S. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.
We find it unexpected that KYOTO KIMONO YUZEN HOLDINGS trades at a P/S ratio that is comparable to the rest of the industry, despite experiencing declining revenues during the medium-term, while the industry as a whole is expected to grow. Even though it matches the industry, we’re uncomfortable with the current P/S ratio, as this dismal revenue performance is unlikely to support a more positive sentiment for long. Unless the the circumstances surrounding the recent medium-term improve, it wouldn’t be wrong to expect a a difficult period ahead for the company’s shareholders.
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