Shareholders Should Be Pleased With NL Industries, Inc.'s (NYSE:NL) Price
Shareholders Should Be Pleased With NL Industries, Inc.'s (NYSE:NL) Price
NL Industries, Inc.'s (NYSE:NL) price-to-sales (or "P/S") ratio of 1.9x may not look like an appealing investment opportunity when you consider close to half the companies in the Commercial Services industry in the United States have P/S ratios below 1.2x. However, the P/S might be high for a reason and it requires further investigation to determine if it's justified.
What Does NL Industries' Recent Performance Look Like?
For example, consider that NL Industries' financial performance has been poor lately as its revenue has been in decline. It might be that many expect the company to still outplay most other companies over the coming period, which has kept the P/S from collapsing. If not, then existing shareholders may be quite nervous about the viability of the share price.
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on NL Industries will help you shine a light on its historical performance.Do Revenue Forecasts Match The High P/S Ratio?
There's an inherent assumption that a company should outperform the industry for P/S ratios like NL Industries' to be considered reasonable.
Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 3.2%. However, a few very strong years before that means that it was still able to grow revenue by an impressive 41% in total over the last three years. Although it's been a bumpy ride, it's still fair to say the revenue growth recently has been more than adequate for the company.
Comparing that recent medium-term revenue trajectory with the industry's one-year growth forecast of 8.7% shows it's noticeably more attractive.
With this information, we can see why NL Industries is trading at such a high P/S compared to the industry. Presumably shareholders aren't keen to offload something they believe will continue to outmanoeuvre the wider industry.
The Final Word
We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.
It's no surprise that NL Industries can support its high P/S given the strong revenue growth its experienced over the last three-year is superior to the current industry outlook. At this stage investors feel the potential continued revenue growth in the future is great enough to warrant an inflated P/S. Barring any significant changes to the company's ability to make money, the share price should continue to be propped up.
And what about other risks? Every company has them, and we've spotted 1 warning sign for NL Industries you should know about.
If these risks are making you reconsider your opinion on NL Industries, 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.
荷蘭工業公司”考慮到美國商業服務行業將近一半的公司的市盈率低於1.2倍,s(紐約證券交易所代碼:NL)1.9倍的市銷率(或 “市盈率”)可能看起來不是一個有吸引力的投資機會。但是,市銷率之高可能是有原因的,需要進一步調查以確定其是否合理。
荷蘭工業近期表現如何?
例如,假設荷蘭工業最近由於收入下降而財務表現不佳。許多人可能預計,在未來一段時間內,該公司的表現仍將超過大多數其他公司,這阻止了市銷售率的暴跌。如果不是,那麼現有股東可能會對股價的可行性感到非常擔憂。
想全面了解公司的收益、收入和現金流嗎?然後,我們關於荷蘭工業的免費報告將幫助您了解其歷史表現。收入預測與高市銷率相匹配嗎?
人們固有的假設是,如果像荷蘭工業公司這樣的市銷率被認爲是合理的,公司的表現應該優於該行業。
首先回顧一下,該公司去年的收入增長並不令人興奮,因爲它公佈了令人失望的3.2%的跌幅。但是,在此之前的幾年非常強勁,這意味着它在過去三年中仍然能夠將總收入增長41%,令人印象深刻。儘管這是一個坎坷的旅程,但可以公平地說,最近的收入增長對公司來說已經足夠了。
將最近的中期收入軌跡與該行業8.7%的年度增長預測進行比較,可以看出該行業明顯更具吸引力。
有了這些信息,我們可以了解荷蘭工業公司爲何與該行業相比市銷率如此之高。據推測,股東們並不熱衷於轉移他們認爲將繼續超越整個行業的東西。
最後一句話
我們可以說,市銷比率的力量主要不是作爲一種估值工具,而是用來衡量當前的投資者情緒和未來預期。
鑑於荷蘭工業在過去三年中實現的強勁收入增長優於當前的行業前景,荷蘭工業公司能夠支持其高市銷率也就不足爲奇了。在現階段,投資者認爲,未來潛在的持續收入增長足以保證市銷率的上升。除非公司的盈利能力發生任何重大變化,否則應繼續支撐股價。
那其他風險呢?每家公司都有它們,我們發現了一個你應該知道的荷蘭工業警告信號。
如果這些風險讓你重新考慮你對荷蘭工業的看法,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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