The Goodyear Tire & Rubber Company (NASDAQ:GT) shares have had a really impressive month, gaining 30% after a shaky period beforehand. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 25% in the last twelve months.

Even after such a large jump in price, Goodyear Tire & Rubber's price-to-sales (or "P/S") ratio of 0.2x might still make it look like a buy right now compared to the Auto Components industry in the United States, where around half of the companies have P/S ratios above 0.7x and even P/S above 3x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

How Has Goodyear Tire & Rubber Performed Recently?

With revenue that's retreating more than the industry's average of late, Goodyear Tire & Rubber has been very sluggish. It seems that many are expecting the dismal revenue performance to persist, which has repressed the P/S. So while you could say the stock is cheap, investors will be looking for improvement before they see it as good value. If not, then existing shareholders will probably struggle to get excited about the future direction of the share price.

Keen to find out how analysts think Goodyear Tire & Rubber's future stacks up against the industry? In that case, our free report is a great place to start.

How Is Goodyear Tire & Rubber's Revenue Growth Trending?

The only time you'd be truly comfortable seeing a P/S as low as Goodyear Tire & Rubber's is when the company's growth is on track to lag the industry.

Retrospectively, the last year delivered a frustrating 6.3% decrease to the company's top line. Regardless, revenue has managed to lift by a handy 18% in aggregate from three years ago, thanks to the earlier period of growth. So we can start by confirming that the company has generally done a good job of growing revenue over that time, even though it had some hiccups along the way.

Looking ahead now, revenue is anticipated to climb by 0.4% per annum during the coming three years according to the seven analysts following the company. That's shaping up to be materially lower than the 35% per year growth forecast for the broader industry.

With this in consideration, its clear as to why Goodyear Tire & Rubber's P/S is falling short industry peers. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.

What Does Goodyear Tire & Rubber's P/S Mean For Investors?

Despite Goodyear Tire & Rubber's share price climbing recently, its P/S still lags most other companies. 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 expected, our analysis of Goodyear Tire & Rubber's analyst forecasts confirms that the company's underwhelming revenue outlook is a major contributor to its low P/S. Shareholders' pessimism on the revenue prospects for the company seems to be the main contributor to the depressed P/S. It's hard to see the share price rising strongly in the near future under these circumstances.

And what about other risks? Every company has them, and we've spotted 1 warning sign for Goodyear Tire & Rubber you should know about.

It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).

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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.