comScore, Inc.'s (NASDAQ:SCOR) Shares Not Telling The Full Story
When close to half the companies operating in the Media industry in the United States have price-to-sales ratios (or "P/S") above 1x, you may consider comScore, Inc. (NASDAQ:SCOR) as an attractive investment with its 0.2x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.
See our latest analysis for comScore
How Has comScore Performed Recently?
Recent times haven't been great for comScore as its revenue has been rising slower than most other companies. Perhaps the market is expecting the current trend of poor revenue growth to continue, which has kept the P/S suppressed. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.
If you'd like to see what analysts are forecasting going forward, you should check out our free report on comScore.
Is There Any Revenue Growth Forecasted For comScore?
There's an inherent assumption that a company should underperform the industry for P/S ratios like comScore's to be considered reasonable.
Retrospectively, the last year delivered virtually the same number to the company's top line as the year before. The longer-term trend has been no better as the company has no revenue growth to show for over the last three years either. Accordingly, shareholders probably wouldn't have been satisfied with the complete absence of medium-term growth.
Turning to the outlook, the next year should generate growth of 3.6% as estimated by the four analysts watching the company. That's shaping up to be similar to the 3.3% growth forecast for the broader industry.
With this in consideration, we find it intriguing that comScore's P/S is lagging behind its industry peers. It may be that most investors are not convinced the company can achieve future growth expectations.
What Does comScore's P/S Mean For Investors?
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.
We've seen that comScore currently trades on a lower than expected P/S since its forecast growth is in line with the wider industry. The low P/S could be an indication that the revenue growth estimates are being questioned by the market. However, if you agree with the analysts' forecasts, you may be able to pick up the stock at an attractive price.
And what about other risks? Every company has them, and we've spotted 2 warning signs for comScore you should know about.
If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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