Investors Still Waiting For A Pull Back In Hapvida Participações e Investimentos S.A. (BVMF:HAPV3)

There wouldn't be many who think Hapvida Participações e Investimentos S.A.'s (BVMF:HAPV3) price-to-sales (or "P/S") ratio of 1.2x is worth a mention when the median P/S for the Healthcare industry in Brazil is very similar. 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.

Check out our latest analysis for Hapvida Participações e Investimentos

How Hapvida Participações e Investimentos Has Been Performing

With revenue growth that's inferior to most other companies of late, Hapvida Participações e Investimentos has been relatively sluggish. It might be that many expect the uninspiring revenue performance to strengthen positively, which has kept the P/S ratio from falling. You'd really hope so, otherwise you're paying a relatively elevated price for a company with this sort of growth profile.

Want the full picture on analyst estimates for the company? Then our free report on Hapvida Participações e Investimentos will help you uncover what's on the horizon.

Is There Some Revenue Growth Forecasted For Hapvida Participações e Investimentos?

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

Taking a look back first, we see that the company grew revenue by an impressive 36% last year. The latest three year period has also seen an excellent 234% overall rise in revenue, aided by its short-term performance. So we can start by confirming that the company has done a great job of growing revenue over that time.

Shifting to the future, estimates from the ten analysts covering the company suggest revenue should grow by 9.8% per annum over the next three years. That's shaping up to be similar to the 11% per year growth forecast for the broader industry.

With this in mind, it makes sense that Hapvida Participações e Investimentos' P/S is closely matching its industry peers. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

The Bottom Line On Hapvida Participações e Investimentos' P/S

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.

Our look at Hapvida Participações e Investimentos' revenue growth estimates show that its P/S is about what we expect, as both metrics follow closely with the industry averages. At this stage investors feel the potential for an improvement or deterioration in revenue isn't great enough to push P/S in a higher or lower direction. If all things remain constant, the possibility of a drastic share price movement remains fairly remote.

Having said that, be aware Hapvida Participações e Investimentos is showing 2 warning signs in our investment analysis, 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.