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    Optimistic Investors Push Solux Co., Ltd. (KOSDAQ:290690) Shares Up 39% But Growth Is Lacking

    Simply Wall St·12/12/2025 21:39:37
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    Solux Co., Ltd. (KOSDAQ:290690) shares have had a really impressive month, gaining 39% after a shaky period beforehand. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 33% in the last twelve months.

    Since its price has surged higher, you could be forgiven for thinking Solux is a stock to steer clear of with a price-to-sales ratios (or "P/S") of 8.4x, considering almost half the companies in Korea's Electrical industry have P/S ratios below 1.7x. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.

    We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

    Check out our latest analysis for Solux

    ps-multiple-vs-industry
    KOSDAQ:A290690 Price to Sales Ratio vs Industry December 12th 2025

    How Solux Has Been Performing

    For example, consider that Solux's financial performance has been poor lately as its revenue has been in decline. One possibility is that the P/S is high because investors think the company will still do enough to outperform the broader industry in the near future. If not, then existing shareholders may be quite 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 Solux will help you shine a light on its historical performance.

    How Is Solux's Revenue Growth Trending?

    In order to justify its P/S ratio, Solux would need to produce outstanding growth that's well in excess of 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 43%. The last three years don't look nice either as the company has shrunk revenue by 51% in aggregate. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

    Weighing that medium-term revenue trajectory against the broader industry's one-year forecast for expansion of 17% shows it's an unpleasant look.

    In light of this, it's alarming that Solux's P/S sits above the majority of other companies. Apparently many investors in the company are way more bullish than recent times would indicate and aren't willing to let go of their stock at any price. Only the boldest would assume these prices are sustainable as a continuation of recent revenue trends is likely to weigh heavily on the share price eventually.

    The Key Takeaway

    The strong share price surge has lead to Solux's P/S soaring as well. 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 Solux revealed its shrinking revenue over the medium-term isn't resulting in a P/S as low as we expected, given the industry is set to grow. When we see revenue heading backwards and underperforming the industry forecasts, we feel the possibility of the share price declining is very real, bringing the P/S back into the realm of reasonability. If recent medium-term revenue trends continue, it will place shareholders' investments at significant risk and potential investors in danger of paying an excessive premium.

    And what about other risks? Every company has them, and we've spotted 2 warning signs for Solux (of which 1 is concerning!) you should know about.

    If you're unsure about the strength of Solux's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.