FSM Holdings Limited (HKG:1721) May Have Run Too Fast Too Soon With Recent 25% Price Plummet

FSM Holdings Limited (HKG:1721) shares have retraced a considerable 25% in the last month, reversing a fair amount of their solid recent performance. Looking back over the past twelve months the stock has been a solid performer regardless, with a gain of 21%.

Although its price has dipped substantially, you could still be forgiven for thinking FSM Holdings is a stock to steer clear of with a price-to-sales ratios (or “P/S”) of 5.1x, considering almost half the companies in Hong Kong’s Machinery industry have P/S ratios below 0.9x. Although, it’s not wise to just take the P/S at face value as there may be an explanation why it’s so lofty.

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