Improved Revenues Required Before Al Seer Marine Supplies and Equipment Company PJSC (ADX:ASM) Stock's 33% Jump Looks Justified

Al Seer Marine Supplies and Equipment Company PJSC (ADX:ASM) shares have had a really impressive month, gaining 33% after a shaky period beforehand. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 19% over that time.

Even after such a large jump in price, Al Seer Marine Supplies and Equipment Company PJSC's price-to-sales (or "P/S") ratio of 2.9x might still make it look like a strong buy right now compared to the wider Aerospace & Defense industry in the United Arab Emirates, where around half of the companies have P/S ratios above 6.4x and even P/S above 15x are quite common. However, the P/S might be quite low for a reason and it requires further investigation to determine if it's justified.

We've discovered 2 warning signs about Al Seer Marine Supplies and Equipment Company PJSC. View them for free.

Check out our latest analysis for Al Seer Marine Supplies and Equipment Company PJSC

How Has Al Seer Marine Supplies and Equipment Company PJSC Performed Recently?

Revenue has risen at a steady rate over the last year for Al Seer Marine Supplies and Equipment Company PJSC, which is generally not a bad outcome. It might be that many expect the respectable revenue performance to degrade, which has repressed the P/S. 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 out of favour.

Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Al Seer Marine Supplies and Equipment Company PJSC will help you shine a light on its historical performance.

Is There Any Revenue Growth Forecasted For Al Seer Marine Supplies and Equipment Company PJSC?

Al Seer Marine Supplies and Equipment Company PJSC's P/S ratio would be typical for a company that's expected to deliver very poor growth or even falling revenue, and importantly, perform much worse than the industry.

Taking a look back first, we see that the company managed to grow revenues by a handy 4.0% last year. The latest three year period has also seen an excellent 106% overall rise in revenue, aided somewhat by its short-term performance. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Comparing the recent medium-term revenue trends against the industry's one-year growth forecast of 164% shows it's noticeably less attractive.

In light of this, it's understandable that Al Seer Marine Supplies and Equipment Company PJSC's P/S sits below the majority of other companies. It seems most investors are expecting to see the recent limited growth rates continue into the future and are only willing to pay a reduced amount for the stock.

The Key Takeaway

Shares in Al Seer Marine Supplies and Equipment Company PJSC have risen appreciably however, its P/S is still subdued. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

As we suspected, our examination of Al Seer Marine Supplies and Equipment Company PJSC revealed its three-year revenue trends are contributing to its low P/S, given they look worse than current industry expectations. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. If recent medium-term revenue trends continue, it's hard to see the share price experience a reversal of fortunes anytime soon.

Plus, you should also learn about these 2 warning signs we've spotted with Al Seer Marine Supplies and Equipment Company PJSC (including 1 which is significant).

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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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.