Cautious Investors Not Rewarding Manitex International, Inc.'s (NASDAQ:MNTX) Performance Completely
Manitex International, Inc.'s (NASDAQ:MNTX) price-to-sales (or "P/S") ratio of 0.4x may look like a pretty appealing investment opportunity when you consider close to half the companies in the Machinery industry in the United States have P/S ratios greater than 1.5x. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.
Check out our latest analysis for Manitex International
How Has Manitex International Performed Recently?
Recent times have been advantageous for Manitex International as its revenues have been rising faster than most other companies. One possibility is that the P/S ratio is low because investors think this strong revenue performance might be less impressive moving forward. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.
Want the full picture on analyst estimates for the company? Then our free report on Manitex International will help you uncover what's on the horizon.
Is There Any Revenue Growth Forecasted For Manitex International?
The only time you'd be truly comfortable seeing a P/S as low as Manitex International's is when the company's growth is on track to lag the industry.
If we review the last year of revenue growth, the company posted a terrific increase of 29%. The latest three year period has also seen a 27% overall rise in revenue, aided extensively by its short-term performance. Accordingly, shareholders would have probably been satisfied with the medium-term rates of revenue growth.
Turning to the outlook, the next three years should generate growth of 7.9% each year as estimated by the lone analyst watching the company. Meanwhile, the rest of the industry is forecast to expand by 9.0% per year, which is not materially different.
With this information, we find it odd that Manitex International is trading at a P/S lower than the industry. It may be that most investors are not convinced the company can achieve future growth expectations.
What Does Manitex International's P/S Mean For Investors?
We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.
We've seen that Manitex International currently trades on a lower than expected P/S since its forecast growth is in line with the wider industry. Despite average revenue growth estimates, there could be some unobserved threats keeping the P/S low. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.
Having said that, be aware Manitex International is showing 1 warning sign in our investment analysis, you should know about.
If these risks are making you reconsider your opinion on Manitex International, explore our interactive list of high quality stocks to get an idea of what else is out there.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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