American Outdoor Brands, Inc. (NASDAQ:AOUT) shareholders won't be pleased to see that the share price has had a very rough month, dropping 27% and undoing the prior period's positive performance. Still, a bad month hasn't completely ruined the past year with the stock gaining 44%, which is great even in a bull market.

Although its price has dipped substantially, there still wouldn't be many who think American Outdoor Brands' price-to-sales (or "P/S") ratio of 0.8x is worth a mention when it essentially matches the median P/S in the United States' Leisure industry. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

How American Outdoor Brands Has Been Performing

American Outdoor Brands certainly has been doing a good job lately as its revenue growth has been positive while most other companies have been seeing their revenue go backwards. It might be that many expect the strong revenue performance to deteriorate like the rest, which has kept the P/S ratio from rising. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.

How Is American Outdoor Brands' Revenue Growth Trending?

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

Retrospectively, the last year delivered a decent 4.9% gain to the company's revenues. Ultimately though, it couldn't turn around the poor performance of the prior period, with revenue shrinking 22% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.

Turning to the outlook, the next year should generate growth of 6.1% as estimated by the two analysts watching the company. That's shaping up to be materially higher than the 1.8% growth forecast for the broader industry.

With this information, we find it interesting that American Outdoor Brands is trading at a fairly similar P/S compared to the industry. It may be that most investors aren't convinced the company can achieve future growth expectations.

What Does American Outdoor Brands' P/S Mean For Investors?

Following American Outdoor Brands' share price tumble, its P/S is just clinging on to the industry median P/S. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

Despite enticing revenue growth figures that outpace the industry, American Outdoor Brands' P/S isn't quite what we'd expect. When we see a strong revenue outlook, with growth outpacing the industry, we can only assume potential uncertainty around these figures are what might be placing slight pressure on the P/S ratio. However, if you agree with the analysts' forecasts, you may be able to pick up the stock at an attractive price.

Many other vital risk factors can be found on the company's balance sheet. You can assess many of the main risks through our free balance sheet analysis for American Outdoor Brands with six simple checks.

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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