AT & S Austria Technologie & Systemtechnik Aktiengesellschaft (VIE:ATS) Might Not Be As Mispriced As It Looks After Plunging 30%

AT & S Austria Technologie & Systemtechnik Aktiengesellschaft (VIE:ATS) shares have had a horrible month, losing 30% after a relatively good period beforehand. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 42% share price drop.

After such a large drop in price, AT & S Austria Technologie & Systemtechnik may be sending buy signals at present with its price-to-sales (or "P/S") ratio of 0.4x, considering almost half of all companies in the Electronic industry in Austria have P/S ratios greater than 0.9x and even P/S higher than 3x aren't out of the ordinary. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

Check out our latest analysis for AT & S Austria Technologie & Systemtechnik

What Does AT & S Austria Technologie & Systemtechnik's P/S Mean For Shareholders?

AT & S Austria Technologie & Systemtechnik could be doing better as it's been growing revenue less than most other companies lately. Perhaps the market is expecting the current trend of poor revenue growth to continue, which has kept the P/S suppressed. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

Want the full picture on analyst estimates for the company? Then our free report on AT & S Austria Technologie & Systemtechnik will help you uncover what's on the horizon.

Do Revenue Forecasts Match The Low P/S Ratio?

The only time you'd be truly comfortable seeing a P/S as low as AT & S Austria Technologie & Systemtechnik's is when the company's growth is on track to lag the industry.

If we review the last year of revenue, the company posted a result that saw barely any deviation from a year ago. Regardless, revenue has managed to lift by a handy 14% in aggregate from three years ago, thanks to the earlier period of growth. Accordingly, shareholders probably wouldn't have been overly satisfied with the unstable medium-term growth rates.

Turning to the outlook, the next three years should generate growth of 26% each year as estimated by the six analysts watching the company. That's shaping up to be materially higher than the 11% per year growth forecast for the broader industry.

With this in consideration, we find it intriguing that AT & S Austria Technologie & Systemtechnik's P/S sits behind most of its industry peers. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.

What We Can Learn From AT & S Austria Technologie & Systemtechnik's P/S?

AT & S Austria Technologie & Systemtechnik's P/S has taken a dip along with its share price. 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.

AT & S Austria Technologie & Systemtechnik's analyst forecasts revealed that its superior revenue outlook isn't contributing to its P/S anywhere near as much as we would have predicted. The reason for this depressed P/S could potentially be found in the risks the market is pricing in. It appears the market could be anticipating revenue instability, because these conditions should normally provide a boost to the share price.

You should always think about risks. Case in point, we've spotted 2 warning signs for AT & S Austria Technologie & Systemtechnik you should be aware of.

If these risks are making you reconsider your opinion on AT & S Austria Technologie & Systemtechnik, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.