Kora Saúde Participações S.A. (BVMF:KRSA3) Stock Catapults 27% Though Its Price And Business Still Lag The Industry

Kora Saúde Participações S.A. (BVMF:KRSA3) shareholders are no doubt pleased to see that the share price has bounced 27% in the last month, although it is still struggling to make up recently lost ground. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 17% in the last twelve months.

Although its price has surged higher, given about half the companies operating in Brazil's Healthcare industry have price-to-sales ratios (or "P/S") above 1.2x, you may still consider Kora Saúde Participações as an attractive investment with its 0.4x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

View our latest analysis for Kora Saúde Participações

How Has Kora Saúde Participações Performed Recently?

With revenue growth that's inferior to most other companies of late, Kora Saúde Participações has been relatively sluggish. It seems that many are expecting the uninspiring revenue performance to persist, which has repressed the growth of the P/S ratio. If you still like the company, you'd be hoping revenue doesn't get any worse and that you could pick up some stock while it's out of favour.

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

Is There Any Revenue Growth Forecasted For Kora Saúde Participações?

In order to justify its P/S ratio, Kora Saúde Participações would need to produce sluggish growth that's trailing the industry.

If we review the last year of revenue growth, the company posted a terrific increase of 16%. The strong recent performance means it was also able to grow revenue by 265% in total over the last three years. 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 7.8% each year during the coming three years according to the five analysts following the company. Meanwhile, the rest of the industry is forecast to expand by 13% per year, which is noticeably more attractive.

With this in consideration, its clear as to why Kora Saúde Participações' P/S is falling short industry peers. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.

What Does Kora Saúde Participações' P/S Mean For Investors?

The latest share price surge wasn't enough to lift Kora Saúde Participações' P/S close to the industry median. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

We've established that Kora Saúde Participações maintains its low P/S on the weakness of its forecast growth being lower than the wider industry, as expected. Shareholders' pessimism on the revenue prospects for the company seems to be the main contributor to the depressed P/S. It's hard to see the share price rising strongly in the near future under these circumstances.

Having said that, be aware Kora Saúde Participações is showing 1 warning sign in our investment analysis, you should know about.

If these risks are making you reconsider your opinion on Kora Saúde Participações, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.