Revenues Working Against Advantage Solutions Inc.'s (NASDAQ:ADV) Share Price
Revenues Working Against Advantage Solutions Inc.'s (NASDAQ:ADV) Share Price
You may think that with a price-to-sales (or "P/S") ratio of 0.3x Advantage Solutions Inc. (NASDAQ:ADV) is a stock worth checking out, seeing as almost half of all the Media companies in the United States have P/S ratios greater than 0.9x and even P/S higher than 3x aren't out of the ordinary. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.
How Has Advantage Solutions Performed Recently?
Advantage Solutions' revenue growth of late has been pretty similar to most other companies. It might be that many expect the mediocre revenue performance to degrade, which has repressed the P/S ratio. Those who are bullish on Advantage Solutions will be hoping that this isn't the case.
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Advantage Solutions.Do Revenue Forecasts Match The Low P/S Ratio?
There's an inherent assumption that a company should underperform the industry for P/S ratios like Advantage Solutions' to be considered reasonable.
Taking a look back first, we see that the company managed to grow revenues by a handy 4.3% last year. This was backed up an excellent period prior to see revenue up by 34% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.
Shifting to the future, estimates from the three analysts covering the company suggest revenue growth is heading into negative territory, declining 1.9% per year over the next three years. That's not great when the rest of the industry is expected to grow by 4.4% per annum.
With this information, we are not surprised that Advantage Solutions is trading at a P/S lower than the industry. Nonetheless, there's no guarantee the P/S has reached a floor yet with revenue going in reverse. There's potential for the P/S to fall to even lower levels if the company doesn't improve its top-line growth.
The Bottom Line On Advantage Solutions' P/S
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.
As we suspected, our examination of Advantage Solutions' analyst forecasts revealed that its outlook for shrinking revenue is contributing to its low P/S. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.
A lot of potential risks can sit within a company's balance sheet. Take a look at our free balance sheet analysis for Advantage Solutions with six simple checks on some of these key factors.
If these risks are making you reconsider your opinion on Advantage Solutions, 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.
你可能會認爲,市銷率(或 “市盈率”)爲0.3倍Advantage Solutions Inc.(納斯達克股票代碼:ADV)值得一試,因爲美國幾乎有一半的媒體公司的市銷率大於0.9倍,即使市盈率高於3倍也並非不尋常。但是,僅按面值計算市銷率是不明智的,因爲可以解釋其有限的原因。
Advantage Solutions最近的表現如何?
Advantage Solutions最近的收入增長與大多數其他公司非常相似。可能是許多人預計平庸的收入表現會下降,這抑制了市銷率。那些看好Advantage Solutions的人會希望情況並非如此。
如果你想了解分析師對未來的預測,你應該查看我們關於Advantage Solutions的免費報告。收入預測與低市銷率相匹配嗎?
人們固有的假設是,如果像Advantage Solutions這樣的市銷率被認爲是合理的,公司的表現應該低於該行業。
首先回顧一下,我們發現該公司去年的收入成功增長了4.3%。在過去三年中,總收入增長了34%,此前這是一個很好的時期。因此,可以公平地說,該公司最近的收入增長非常好。
展望未來,報道該公司的三位分析師的估計表明,收入增長將進入負值區間,未來三年每年下降1.9%。當該行業其他部門預計每年增長4.4%時,情況就不太好了。
有了這些信息,Advantage Solutions的市銷售率低於該行業也就不足爲奇了。但是,尚不能保證市銷率已達到最低水平,收入反向增長。如果公司不改善營收增長,市銷率有可能降至更低的水平。
Advantage Solutions 市銷率的底線
通常,我們傾向於限制使用市銷率來確定市場對公司整體健康狀況的看法。
正如我們所懷疑的那樣,我們對Advantage Solutions分析師預測的審查顯示,其收入萎縮的前景是其低市銷率的原因。在現階段,投資者認爲,收入改善的可能性不足以證明更高的市銷率是合理的。除非這些條件有所改善,否則它們將繼續構成股價在這些水平附近的障礙。
公司的資產負債表中可能存在許多潛在風險。看看我們對Advantage Solutions的免費資產負債表分析,其中對其中一些關鍵因素進行了六項簡單檢查。
如果這些風險讓你重新考慮對Advantage Solutions的看法,請瀏覽我們的高質量股票互動清單,了解還有什麼。
對這篇文章有反饋嗎?對內容感到擔憂?直接聯繫我們。 或者,給編輯團隊 (at) simplywallst.com 發送電子郵件。
Simply Wall St的這篇文章本質上是籠統的。我們僅使用公正的方法根據歷史數據和分析師的預測提供評論,我們的文章無意作爲財務建議。它不構成買入或賣出任何股票的建議,也沒有考慮到您的目標或財務狀況。我們的目標是爲您提供由基本數據驅動的長期重點分析。請注意,我們的分析可能不考慮最新的價格敏感型公司公告或定性材料。簡而言之,華爾街沒有持有任何上述股票的頭寸。
譯文內容由第三人軟體翻譯。
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