Investors Interested In Tattooed Chef, Inc.'s (NASDAQ:TTCF) Revenues
With a median price-to-sales (or "P/S") ratio of close to 0.9x in the Food industry in the United States, you could be forgiven for feeling indifferent about Tattooed Chef, Inc.'s (NASDAQ:TTCF) P/S ratio of 0.6x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.
View our latest analysis for Tattooed Chef
How Tattooed Chef Has Been Performing
Recent times have been advantageous for Tattooed Chef as its revenues have been rising faster than most other companies. It might be that many expect the strong revenue performance to wane, which has kept the P/S ratio from rising. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.
Want the full picture on analyst estimates for the company? Then our free report on Tattooed Chef will help you uncover what's on the horizon.
Is There Some Revenue Growth Forecasted For Tattooed Chef?
In order to justify its P/S ratio, Tattooed Chef would need to produce growth that's similar to the industry.
Taking a look back first, we see that the company grew revenue by an impressive 19% last year. Pleasingly, revenue has also lifted 173% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.
Shifting to the future, estimates from the three analysts covering the company suggest revenue should grow by 5.2% over the next year. That's shaping up to be similar to the 5.1% growth forecast for the broader industry.
With this in mind, it makes sense that Tattooed Chef's P/S is closely matching its industry peers. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.
The Bottom Line On Tattooed Chef's P/S
Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.
A Tattooed Chef's P/S seems about right to us given the knowledge that analysts are forecasting a revenue outlook that is similar to the Food industry. Right now shareholders are comfortable with the P/S as they are quite confident future revenue won't throw up any surprises. If all things remain constant, the possibility of a drastic share price movement remains fairly remote.
And what about other risks? Every company has them, and we've spotted 2 warning signs for Tattooed Chef (of which 1 is potentially serious!) you should know about.
If you're unsure about the strength of Tattooed Chef's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.
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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