There are not many who think AIK Fotboll AB (publ) (NGM:AIK B) price-to-sales ratio (or “P/S”) of 0.2x is worth noting when the median P/S for the entertainment industry in Sweden is similar and stands at around 0.6x. However, investors could be missing a clear opportunity or potential pullback if there is no rational basis for the P/S.
Check out our latest analysis for AIK Fotboll
What does AIK Fotboll’s P/S mean for shareholders?
As an example, AIK Fotboll's revenue has been declining over the last year, which is not ideal at all. Perhaps investors believe that the recent revenue trend is enough to keep up with the industry, preventing a decline in P/S. If not, existing shareholders may be a little concerned about the profitability of the share price.
We don’t have analyst forecasts, but you can see how recent trends are positioning the company for the future by checking out our free AIK Fotboll earnings, revenue and cash flow report.
How is AIK Fotboll’s sales growth developing?
AIK Fotboll's price-to-sales ratio is typical of a company that is expected to deliver only moderate growth and, importantly, industry-standard performance.
Looking back, last year saw a frustrating 18% drop in sales. However, despite the last 12 months as a whole, sales have increased by an admirable 128% year-on-year. So, first of all, we can say that the company has done a very good job of increasing sales overall during this time, even if there have been some hiccups along the way.
Compared to the industry’s one-year growth forecast of 0.02%, the recent medium-term sales trend is much more tempting
With this in mind, we find it interesting that AIK Fotboll is trading at a fairly similar price-to-earnings ratio compared to the industry. Apparently, some shareholders believe that its recent performance has reached its limits and have accepted lower selling prices.
What can we learn from AIK Fotboll’s horsepower statistics?
In general, we prefer to use the price-to-sales ratio only when we want to determine what the market thinks about the overall health of a company.
We did not expect AIK Fotboll's P/S to be in line with the wider industry, given that the revenue growth over the past three years is higher than the current industry forecast. It is fair to assume that potential risks facing the company could be the reason for the lower than expected P/S. It seems that some are actually expecting revenue instability, given that the continuation of these recent medium-term conditions would normally boost the share price.
Please note, however, AIK Fotboll shows 2 warning signs in our investment analysis, and one of them is significant.
If this Risks make you reconsider your opinion about AIK Fotbollexplore our interactive list of high-quality stocks to get a sense of what else is out there.
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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.
