The a.k.a. Brands Holding Corp. (NYSE:AKA) share price has done very well over the last month, posting an excellent gain of 29%. The last month tops off a massive increase of 270% in the last year.

Even after such a large jump in price, you could still be forgiven for feeling indifferent about a.k.a. Brands Holding's P/S ratio of 0.4x, since the median price-to-sales (or "P/S") ratio for the Specialty Retail industry in the United States is about the same. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

What Does a.k.a. Brands Holding's P/S Mean For Shareholders?

a.k.a. Brands Holding hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. Perhaps the market is expecting its poor revenue performance to improve, keeping the P/S from dropping. However, if this isn't the case, investors might get caught out paying too much for the stock.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on a.k.a. Brands Holding.

How Is a.k.a. Brands Holding's Revenue Growth Trending?

There's an inherent assumption that a company should be matching the industry for P/S ratios like a.k.a. Brands Holding's to be considered reasonable.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 1.1%. However, a few very strong years before that means that it was still able to grow revenue by an impressive 58% in total over the last three years. So we can start by confirming that the company has generally done a very good job of growing revenue over that time, even though it had some hiccups along the way.

Turning to the outlook, the next three years should generate growth of 2.7% per year as estimated by the five analysts watching the company. With the industry predicted to deliver 5.7% growth per year, the company is positioned for a weaker revenue result.

With this information, we find it interesting that a.k.a. Brands Holding is trading at a fairly similar P/S compared to the industry. 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.

What We Can Learn From a.k.a. Brands Holding's P/S?

Its shares have lifted substantially and now a.k.a. Brands Holding's P/S is back within range of the industry median. 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.

When you consider that a.k.a. Brands Holding's revenue growth estimates are fairly muted compared to the broader industry, it's easy to see why we consider it unexpected to be 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. A positive change is needed in order to justify the current price-to-sales ratio.

Plus, you should also learn about this 1 warning sign we've spotted with a.k.a. Brands Holding.

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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