Ânima Holding S.A.'s (BVMF:ANIM3) Share Price Not Quite Adding Up

With a median price-to-sales (or "P/S") ratio of close to 0.5x in the Consumer Services industry in Brazil, you could be forgiven for feeling indifferent about Ânima Holding S.A.'s (BVMF:ANIM3) P/S ratio of 0.4x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

View our latest analysis for Ânima Holding

What Does Ânima Holding's Recent Performance Look Like?

Ânima Holding could be doing better as it's been growing revenue less than most other companies lately. It might be that many expect the uninspiring revenue performance to strengthen positively, which has kept the P/S ratio from falling. However, if this isn't the case, investors might get caught out paying too much for the stock.

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

Is There Some Revenue Growth Forecasted For Ânima Holding?

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

Taking a look back first, we see that the company managed to grow revenues by a handy 4.3% last year. Pleasingly, revenue has also lifted 151% in aggregate from three years ago, partly thanks to the last 12 months of growth. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Looking ahead now, revenue is anticipated to climb by 4.4% per year during the coming three years according to the nine analysts following the company. That's shaping up to be materially lower than the 16% each year growth forecast for the broader industry.

With this in mind, we find it intriguing that Ânima Holding's P/S is closely matching its industry peers. Apparently many investors in the company are less bearish than analysts indicate and aren't willing to let go of their stock right now. These shareholders may be setting themselves up for future disappointment if the P/S falls to levels more in line with the growth outlook.

The Final Word

While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

Given that Ânima Holding's revenue growth projections are relatively subdued in comparison to the wider industry, it comes as a surprise to see it trading at its current P/S ratio. At present, we aren't confident in the P/S as the predicted future revenues aren't likely to support a more positive sentiment for long. Circumstances like this present a risk to current and prospective investors who may see share prices fall if the low revenue growth impacts the sentiment.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Ânima Holding that you need to be mindful of.

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.