Investors Still Waiting For A Pull Back In ARYZTA AG (VTX:ARYN)
With a median price-to-sales (or "P/S") ratio of close to 0.8x in the Food industry in Switzerland, you could be forgiven for feeling indifferent about ARYZTA AG's (VTX:ARYN) P/S ratio, which comes in at about the same. 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.
Check out our latest analysis for ARYZTA
How Has ARYZTA Performed Recently?
ARYZTA certainly has been doing a good job lately as it's been growing revenue more than most other companies. Perhaps the market is expecting this level of performance to taper off, keeping the P/S from soaring. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.
Want the full picture on analyst estimates for the company? Then our free report on ARYZTA will help you uncover what's on the horizon.
Is There Some Revenue Growth Forecasted For ARYZTA?
The only time you'd be comfortable seeing a P/S like ARYZTA's is when the company's growth is tracking the industry closely.
Taking a look back first, we see that the company grew revenue by an impressive 21% last year. The latest three year period has also seen a 27% overall rise in revenue, aided extensively by its short-term performance. Therefore, it's fair to say the revenue growth recently has been respectable for the company.
Shifting to the future, estimates from the dual analysts covering the company suggest revenue should grow by 3.9% each year over the next three years. That's shaping up to be similar to the 2.9% per year growth forecast for the broader industry.
With this in mind, it makes sense that ARYZTA'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 Final Word
Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.
Our look at ARYZTA's revenue growth estimates show that its P/S is about what we expect, as both metrics follow closely with the industry averages. At this stage investors feel the potential for an improvement or deterioration in revenue isn't great enough to push P/S in a higher or lower direction. If all things remain constant, the possibility of a drastic share price movement remains fairly remote.
A lot of potential risks can sit within a company's balance sheet. You can assess many of the main risks through our free balance sheet analysis for ARYZTA with six simple checks.
If these risks are making you reconsider your opinion on ARYZTA, 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.
