Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) shareholders would be excited to see that the share price has had a great month, posting a 126% gain and recovering from prior weakness. But the last month did very little to improve the 57% share price decline over the last year.
In spite of the firm bounce in price, it's still not a stretch to say that Petco Health and Wellness Company's price-to-sales (or "P/S") ratio of 0.1x right now seems quite "middle-of-the-road" compared to the Specialty Retail industry in the United States, where the median P/S ratio is around 0.4x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.
NasdaqGS:WOOF Price to Sales Ratio vs Industry May 29th 2024
What Does Petco Health and Wellness Company's P/S Mean For Shareholders?
With revenue growth that's inferior to most other companies of late, Petco Health and Wellness Company has been relatively sluggish. It might be that many expect the uninspiring revenue performance to strengthen positively, which has kept the P/S ratio from falling. You'd really hope so, otherwise you're paying a relatively elevated price for a company with this sort of growth profile.
Want the full picture on analyst estimates for the company? Then our free report on Petco Health and Wellness Company will help you uncover what's on the horizon.
Do Revenue Forecasts Match The P/S Ratio?
There's an inherent assumption that a company should be matching the industry for P/S ratios like Petco Health and Wellness Company's to be considered reasonable.
If we review the last year of revenue, the company posted a result that saw barely any deviation from a year ago. Still, the latest three year period was better as it's delivered a decent 19% overall rise in revenue. Therefore, it's fair to say that revenue growth has been inconsistent recently for the company.
Shifting to the future, estimates from the analysts covering the company suggest revenue should grow by 1.2% per year over the next three years. With the industry predicted to deliver 5.7% growth per year, the company is positioned for a weaker revenue result.
In light of this, it's curious that Petco Health and Wellness Company's P/S sits in line with the majority of other companies. It seems most investors are ignoring the fairly limited growth expectations and are willing to pay up for exposure to the stock. Maintaining these prices will be difficult to achieve as this level of revenue growth is likely to weigh down the shares eventually.
The Final Word
Petco Health and Wellness Company's stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.
Given that Petco Health and Wellness Company's revenue growth projections are relatively subdued in comparison to the wider industry, it comes as a surprise to see it trading at its current P/S ratio. At present, we aren't confident in the P/S as the predicted future revenues aren't likely to support a more positive sentiment for long. Circumstances like this present a risk to current and prospective investors who may see share prices fall if the low revenue growth impacts the sentiment.
Having said that, be aware Petco Health and Wellness Company is showing 1 warning sign in our investment analysis, you should know about.
If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.
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Petco Health and Wellness Company, Inc.(納斯達克股票代碼:WOOF)的股東們會很高興看到股價經歷了一個不錯的月份,漲幅爲126%,並從先前的疲軟中恢復過來。但是上個月幾乎沒有改善去年股價下跌57%的局面。
儘管公司的價格有所反彈,但可以毫不誇張地說,與美國的專業零售行業相比,Petco Health and Wellness Company目前的0.1倍市銷率(或 “市盈率”)似乎相當 “處於中間位置”,後者的市銷率中位數約爲0.4倍。但是,如果市銷率沒有合理的基礎,投資者可能會忽略明顯的機會或潛在的挫折。
納斯達克GS:WOOF 與行業的市銷比率 2024 年 5 月 29 日
Petco健康與保健公司的市銷率對股東意味着什麼?
Petco Health and Wellness Company最近的收入增長不如其他大多數公司,因此一直相對疲軟。許多人可能預計,平淡無奇的收入表現將積極增強,這阻止了市銷售率的下降。你真的希望如此,否則你會爲一傢俱有這種增長概況的公司付出相對較高的代價。
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Petco Health and Wellness Company的股票最近勢頭強勁,這使其市銷率與業內其他公司相比有所上升。有人認爲,在某些行業中,市銷率是衡量價值的較差指標,但它可以是一個有力的商業信心指標。
鑑於與整個行業相比,Petco Health and Wellness Company的收入增長預測相對疲軟,看到其目前的市銷率交易令人驚訝。目前,我們對市銷率沒有信心,因爲預期的未來收入不太可能長期支撐更積極的情緒。像這樣的情況給當前和潛在的投資者帶來了風險,如果低收入增長影響市場情緒,他們可能會看到股價下跌。