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Concord Medical Services Holdings Limited (NYSE:CCM) Could Be Riskier Than It Looks

It’s not a stretch to say that Concord Medical Services Holdings Limited’s (NYSE:CCM) price-to-sales (or “P/S”) ratio of 1x right now seems quite “middle-of-the-road” for companies in the Healthcare industry in the United States, where the median P/S ratio is around 1.1x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

How Has Concord Medical Services Holdings Performed Recently?

For example, consider that Concord Medical Services Holdings’ financial performance has been poor lately as its revenue has been in decline. 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 you like the company, you’d at least be hoping this is the case so that you could potentially pick up some stock while it’s not quite in favour.Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Concord Medical Services Holdings will help you shine a light on its historical performance.

How Is Concord Medical Services Holdings’ Revenue Growth Trending?

Concord Medical Services 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.

Taking a look back first, the company’s revenue growth last year wasn’t something to get excited about as it posted a disappointing decline of 2.8%. However, a few very strong years before that means that it was still able to grow revenue by an impressive 138% in total over the last three years. Accordingly, while they would have preferred to keep the run going, shareholders would definitely welcome the medium-term rates of revenue growth.

Comparing that recent medium-term revenue trajectory with the industry’s one-year growth forecast of 7.3% shows it’s noticeably more attractive.

In light of this, it’s curious that Concord Medical Services Holdings’ P/S sits in line with the majority of other companies. It may be that most investors are not convinced the company can maintain its recent growth rates.

Source : Simply Wall