Construtora Tenda S.A.'s (BVMF:TEND3) Shares Leap 30% Yet They're Still Not Telling The Full Story

Construtora Tenda S.A. (BVMF:TEND3) shares have had a really impressive month, gaining 30% after a shaky period beforehand. Looking back a bit further, it's encouraging to see the stock is up 92% in the last year.

Even after such a large jump in price, you could still be forgiven for feeling indifferent about Construtora Tenda's P/S ratio of 0.9x, since the median price-to-sales (or "P/S") ratio for the Consumer Durables industry in Brazil is also close to 0.7x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

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See our latest analysis for Construtora Tenda

How Has Construtora Tenda Performed Recently?

With revenue growth that's inferior to most other companies of late, Construtora Tenda has been relatively sluggish. One possibility is that the P/S ratio is moderate because investors think this lacklustre revenue performance will turn around. If not, then existing shareholders may be a little nervous about the viability of the share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Construtora Tenda.

Is There Some Revenue Growth Forecasted For Construtora Tenda?

The only time you'd be comfortable seeing a P/S like Construtora Tenda's is when the company's growth is tracking the industry closely.

If we review the last year of revenue growth, the company posted a terrific increase of 18%. The latest three year period has also seen an excellent 48% overall rise in revenue, aided by its short-term performance. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Turning to the outlook, the next year should generate growth of 30% as estimated by the ten analysts watching the company. That's shaping up to be materially higher than the 19% growth forecast for the broader industry.

In light of this, it's curious that Construtora Tenda's P/S sits in line with the majority of other companies. It may be that most investors aren't convinced the company can achieve future growth expectations.

The Bottom Line On Construtora Tenda's P/S

Construtora Tenda appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry 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.

Looking at Construtora Tenda's analyst forecasts revealed that its superior revenue outlook isn't giving the boost to its P/S that we would've expected. There could be some risks that the market is pricing in, which is preventing the P/S ratio from matching the positive outlook. However, if you agree with the analysts' forecasts, you may be able to pick up the stock at an attractive price.

There are also other vital risk factors to consider before investing and we've discovered 2 warning signs for Construtora Tenda that you should be aware of.

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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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.