Little Excitement Around Kora Saúde Participações S.A.'s (BVMF:KRSA3) Revenues As Shares Take 25% Pounding

Kora Saúde Participações S.A. (BVMF:KRSA3) shares have retraced a considerable 25% in the last month, reversing a fair amount of their solid recent performance. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 18% share price drop.

Since its price has dipped substantially, when close to half the companies operating in Brazil's Healthcare industry have price-to-sales ratios (or "P/S") above 1x, you may consider Kora Saúde Participações as an enticing stock to check out with its 0.3x 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.

See our latest analysis for Kora Saúde Participações

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

With revenue growth that's inferior to most other companies of late, Kora Saúde Participações has been relatively sluggish. Perhaps the market is expecting the current trend of poor revenue growth to continue, which has kept the P/S suppressed. 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.

How Is Kora Saúde Participações' Revenue Growth Trending?

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

Taking a look back first, we see that the company grew revenue by an impressive 16% last year. The latest three year period has also seen an excellent 265% 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.

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. That's shaping up to be materially lower than the 13% per annum growth forecast for the broader industry.

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 southerly movements of Kora Saúde Participações' shares means its P/S is now sitting at a pretty low level. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

As we suspected, our examination of Kora Saúde Participações' analyst forecasts revealed that its inferior revenue outlook is contributing to its low P/S. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

Plus, you should also learn about this 1 warning sign we've spotted with Kora Saúde Participações.

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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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.