Lacklustre Performance Is Driving Al Seer Marine Supplies and Equipment Company PJSC's (ADX:ASM) 89% Price Drop

Al Seer Marine Supplies and Equipment Company PJSC (ADX:ASM) shareholders that were waiting for something to happen have been dealt a blow with a 89% share price drop in the last month. For any long-term shareholders, the last month ends a year to forget by locking in a 95% share price decline.

Since its price has dipped substantially, Al Seer Marine Supplies and Equipment Company PJSC's price-to-sales (or "P/S") ratio of 0.3x might 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 6.2x and even P/S above 13x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly reduced P/S.

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

What Does Al Seer Marine Supplies and Equipment Company PJSC's P/S Mean For Shareholders?

Al Seer Marine Supplies and Equipment Company PJSC has been doing a decent job lately as it's been growing revenue at a reasonable pace. Perhaps the market believes the recent revenue performance might fall short of industry figures in the near future, leading to a reduced P/S. Those who are bullish on Al Seer Marine Supplies and Equipment Company PJSC will be hoping that this isn't the case, so that they can pick up the stock at a lower valuation.

Although there are no analyst estimates available for Al Seer Marine Supplies and Equipment Company PJSC, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.

How Is Al Seer Marine Supplies and Equipment Company PJSC's Revenue Growth Trending?

The only time you'd be truly comfortable seeing a P/S as depressed as Al Seer Marine Supplies and Equipment Company PJSC's is when the company's growth is on track to lag the industry decidedly.

If we review the last year of revenue growth, the company posted a worthy increase of 3.9%. This was backed up an excellent period prior to see revenue up by 124% in total over the last three years. 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 49% shows it's noticeably less attractive.

With this information, we can see why Al Seer Marine Supplies and Equipment Company PJSC is trading at a P/S lower than the industry. 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 plummeted and its P/S has followed suit. 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.

In line with expectations, Al Seer Marine Supplies and Equipment Company PJSC maintains its low P/S on the weakness of its recent three-year growth being lower than the wider industry forecast. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. If recent medium-term revenue trends continue, it's hard to see the share price experience a reversal of fortunes anytime soon.

Don't forget that there may be other risks. For instance, we've identified 1 warning sign for Al Seer Marine Supplies and Equipment Company PJSC that you should be aware of.

If you're unsure about the strength of Al Seer Marine Supplies and Equipment Company PJSC's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.