Despite an already strong run, ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) shares have been powering on, with a gain of 25% in the last thirty days. The annual gain comes to 235% following the latest surge, making investors sit up and take notice.

In spite of the firm bounce in price, given about half the companies operating in the United States' Shipping industry have price-to-sales ratios (or "P/S") above 1.2x, you may still consider ZIM Integrated Shipping Services as an attractive investment with its 0.5x 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.

What Does ZIM Integrated Shipping Services' P/S Mean For Shareholders?

ZIM Integrated Shipping Services could be doing better as its revenue has been going backwards lately while most other companies have been seeing positive revenue growth. The P/S ratio is probably low because investors think this poor revenue performance isn't going to get any better. If you still 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.

Is There Any Revenue Growth Forecasted For ZIM Integrated Shipping Services?

The only time you'd be truly comfortable seeing a P/S as low as ZIM Integrated Shipping Services' is when the company's growth is on track to lag the industry.

Retrospectively, the last year delivered a frustrating 26% decrease to the company's top line. As a result, revenue from three years ago have also fallen 8.1% overall. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

Turning to the outlook, the next year should demonstrate the company's robustness, generating growth of 15% as estimated by the five analysts watching the company. Meanwhile, the broader industry is forecast to contract by 0.5%, which would indicate the company is doing very well.

With this in mind, we find it intriguing that ZIM Integrated Shipping Services' P/S falls short of its industry peers. It looks like most investors aren't convinced at all that the company can achieve positive future growth in the face of a shrinking broader industry.

What We Can Learn From ZIM Integrated Shipping Services' P/S?

ZIM Integrated Shipping Services' stock price has surged recently, but its but its P/S still remains modest. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

Our look into ZIM Integrated Shipping Services' analyst forecasts has shown that it could be trading at a significant discount in terms of P/S, as it is expected to far outperform the industry. When we see a superior revenue outlook with some actual growth, we can only assume investor uncertainty is what's been suppressing the P/S figures. One major risk is whether its revenue trajectory can keep outperforming under these tough industry conditions. So, the risk of a price drop looks to be subdued, but investors seem to think future revenue could see a lot of volatility.

Having said that, be aware ZIM Integrated Shipping Services is showing 2 warning signs in our investment analysis, 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).

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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.