3R Petroleum Óleo e Gás S.A.'s (BVMF:RRRP3) Subdued P/S Might Signal An Opportunity

There wouldn't be many who think 3R Petroleum Óleo e Gás S.A.'s (BVMF:RRRP3) price-to-sales (or "P/S") ratio of 1.6x is worth a mention when the median P/S for the Oil and Gas industry in Brazil is similar at about 1.2x. 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.

Check out our latest analysis for 3R Petroleum Óleo e Gás

What Does 3R Petroleum Óleo e Gás' Recent Performance Look Like?

Recent times have been pleasing for 3R Petroleum Óleo e Gás as its revenue has risen in spite of the industry's average revenue going into reverse. It might be that many expect the strong revenue performance to deteriorate like the rest, which has kept the P/S ratio from rising. Those who are bullish on 3R Petroleum Óleo e Gás will be hoping that this isn't the case, so that they can pick up the stock at a slightly lower valuation.

Keen to find out how analysts think 3R Petroleum Óleo e Gás' future stacks up against the industry? In that case, our free report is a great place to start.

Is There Some Revenue Growth Forecasted For 3R Petroleum Óleo e Gás?

3R Petroleum Óleo e Gás' 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.

Taking a look back first, we see that the company grew revenue by an impressive 176% last year. The latest three year period has also seen an incredible overall rise in revenue, aided by its incredible short-term performance. Accordingly, shareholders would have been over the moon with those medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 99% during the coming year according to the eight analysts following the company. That's shaping up to be materially higher than the 16% growth forecast for the broader industry.

With this information, we find it interesting that 3R Petroleum Óleo e Gás is trading at a fairly similar P/S compared to the industry. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.

What We Can Learn From 3R Petroleum Óleo e Gás' P/S?

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.

Despite enticing revenue growth figures that outpace the industry, 3R Petroleum Óleo e Gás' P/S isn't quite what we'd expect. There could be some risks that the market is pricing in, which is preventing the P/S ratio from matching the positive outlook. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.

It is also worth noting that we have found 2 warning signs for 3R Petroleum Óleo e Gás that you need to take into consideration.

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.