Minerva S.A. (BVMF:BEEF3) Stock Rockets 28% But Many Are Still Ignoring The Company

Minerva S.A. (BVMF:BEEF3) shareholders have had their patience rewarded with a 28% share price jump in the last month. But the gains over the last month weren't enough to make shareholders whole, as the share price is still down 9.9% in the last twelve months.

In spite of the firm bounce in price, given about half the companies operating in Brazil's Food industry have price-to-sales ratios (or "P/S") above 0.7x, you may still consider Minerva as an attractive investment with its 0.1x P/S ratio. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

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View our latest analysis for Minerva

What Does Minerva's P/S Mean For Shareholders?

Recent times have been advantageous for Minerva as its revenues have been rising faster than most other companies. It might be that many expect the strong revenue performance to degrade substantially, which has repressed the share price, and thus the P/S ratio. If the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.

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

How Is Minerva's Revenue Growth Trending?

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

Retrospectively, the last year delivered an exceptional 58% gain to the company's top line. Pleasingly, revenue has also lifted 45% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Turning to the outlook, the next year should generate growth of 23% as estimated by the eleven analysts watching the company. Meanwhile, the rest of the industry is forecast to only expand by 7.0%, which is noticeably less attractive.

In light of this, it's peculiar that Minerva's P/S sits below the majority of other companies. It looks like most investors are not convinced at all that the company can achieve future growth expectations.

The Bottom Line On Minerva's P/S

The latest share price surge wasn't enough to lift Minerva's P/S close to the industry median. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

To us, it seems Minerva currently trades on a significantly depressed P/S given its forecasted revenue growth is higher than the rest of its industry. There could be some major risk factors that are placing downward pressure on the P/S ratio. While the possibility of the share price plunging seems unlikely due to the high growth forecasted for the company, the market does appear to have some hesitation.

And what about other risks? Every company has them, and we've spotted 1 warning sign for Minerva you should know about.

Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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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.