Yduqs Participações S.A.'s (BVMF:YDUQ3) 25% Share Price Plunge Could Signal Some Risk

Unfortunately for some shareholders, the Yduqs Participações S.A. (BVMF:YDUQ3) share price has dived 25% in the last thirty days, prolonging recent pain. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 19% in that time.

Even after such a large drop in price, you could still be forgiven for feeling indifferent about Yduqs Participações' P/S ratio of 0.7x, since the median price-to-sales (or "P/S") ratio for the Consumer Services industry in Brazil is also close to 0.6x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

View our latest analysis for Yduqs Participações

What Does Yduqs Participações' Recent Performance Look Like?

Yduqs Participações' revenue growth of late has been pretty similar to most other companies. The P/S ratio is probably moderate because investors think this modest revenue performance will continue. If this is the case, then at least existing shareholders won't be losing sleep over the current share price.

Keen to find out how analysts think Yduqs Participações' future stacks up against the industry? In that case, our free report is a great place to start.

Do Revenue Forecasts Match The P/S Ratio?

Yduqs Participações' P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.

Retrospectively, the last year delivered a decent 13% gain to the company's revenues. Pleasingly, revenue has also lifted 32% 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.

Turning to the outlook, the next three years should generate growth of 6.9% per annum as estimated by the nine analysts watching the company. That's shaping up to be materially lower than the 14% per year growth forecast for the broader industry.

In light of this, it's curious that Yduqs Participações' P/S sits in line with the majority of other companies. 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.

What Does Yduqs Participações' P/S Mean For Investors?

With its share price dropping off a cliff, the P/S for Yduqs Participações looks to be in line with the rest of the Consumer Services industry. 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.

Given that Yduqs Participações' 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.

Having said that, be aware Yduqs Participações is showing 3 warning signs in our investment analysis, and 1 of those is a bit concerning.

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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