A 22 % year‑over‑year drop in net sales slashes the denominator that underlies most relative‑valuation gauges. Assuming the stock price has not moved in lock‑step with revenue, the price‑to‑sales (P/S) multiple will rise sharply—an apparent “expansion” of the multiple that actually reflects a weaker top line rather than any premium for growth. More materially, the dip in sales drags down operating income (down from $49.3 m to $45.5 m for the year) and compresses earnings per share, so the price‑to‑earnings (P/E) and EV/EBITDA ratios are likely to fall. In practical terms, a 22 % revenue contraction typically forces analysts to trim valuation multiples by roughly the same magnitude, especially in a cyclical electronics sector where sales are a leading proxy for future cash flow.
From a trading standpoint, the market is already pricing in the revenue shortfall, as evidenced by a negative sentiment score (‑30) and the stock’s recent drift lower. Technical charts show the shares testing the 200‑day moving average and holding near a key support zone at the prior fiscal‑year low; a break below would open a short‑term downtrend with a 5‑%‑plus downside target, while a decisive bounce above the moving average could trigger a short‑cover rally, especially if management’s FY‑2026 guidance signals a revenue recovery and margin expansion. In sum, the 22 % sales decline compresses valuation multiples, making KE look cheaper on a relative basis but also flagging heightened downside risk until the top line shows credible upside. Traders should watch earnings guidance, margin trends, and the next price action around the 200‑day MA for entry/exit signals.