Unisync Corp.'s (TSE:UNI) Shares Lagging The Industry But So Is The Business
When you see that almost half of the companies in the Luxury industry in Canada have price-to-sales ratios (or "P/S") above 1.9x, Unisync Corp. (TSE:UNI) looks to be giving off some buy signals with its 0.3x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.
See our latest analysis for Unisync
What Does Unisync's Recent Performance Look Like?
The revenue growth achieved at Unisync over the last year would be more than acceptable for most companies. Perhaps the market is expecting this acceptable revenue performance to take a dive, which has kept the P/S suppressed. 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 out of favour.
Although there are no analyst estimates available for Unisync, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
How Is Unisync's Revenue Growth Trending?
In order to justify its P/S ratio, Unisync would need to produce sluggish growth that's trailing the industry.
Retrospectively, the last year delivered an exceptional 24% gain to the company's top line. Revenue has also lifted 11% in aggregate from three years ago, mostly thanks to the last 12 months of growth. Accordingly, shareholders would have probably been satisfied with the medium-term rates of revenue growth.
Comparing that to the industry, which is predicted to deliver 7.7% growth in the next 12 months, the company's momentum is weaker, based on recent medium-term annualised revenue results.
With this in consideration, it's easy to understand why Unisync's P/S falls short of the mark set by its industry peers. Apparently many shareholders weren't comfortable holding on to something they believe will continue to trail the wider industry.
The Key Takeaway
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.
As we suspected, our examination of Unisync revealed its three-year revenue trends are contributing to its low P/S, given they look worse than current industry expectations. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. If recent medium-term revenue trends continue, it's hard to see the share price experience a reversal of fortunes anytime soon.
It's always necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Unisync (at least 2 which shouldn't be ignored), and understanding these should be part of your investment process.
If these risks are making you reconsider your opinion on Unisync, explore our interactive list of high quality stocks to get an idea of what else is out there.
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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