Revenues Working Against Kora Saúde Participações S.A.'s (BVMF:KRSA3) Share Price Following 25% Dive

Unfortunately for some shareholders, the Kora Saúde Participações S.A. (BVMF:KRSA3) share price has dived 25% in the last thirty days, prolonging recent pain. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 48% share price drop.

Following the heavy fall in price, considering around half the companies operating in Brazil's Healthcare industry have price-to-sales ratios (or "P/S") above 0.7x, you may consider Kora Saúde Participações as an solid investment opportunity with its 0.2x 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

How Kora Saúde Participações Has Been Performing

With revenue growth that's inferior to most other companies of late, Kora Saúde Participações has been relatively sluggish. The P/S ratio is probably low because investors think this lacklustre revenue performance isn't going to get any better. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

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.

Taking a look back first, we see that the company managed to grow revenues by a handy 7.1% last year. The latest three year period has also seen an excellent 230% overall rise in revenue, aided somewhat by its short-term performance. So we can start by confirming that the company has done a great job of growing revenues over that time.

Turning to the outlook, the next three years should generate growth of 6.8% each year as estimated by the four analysts watching the company. That's shaping up to be materially lower than the 11% per annum growth forecast for the broader industry.

With this information, we can see why Kora Saúde Participações is trading at a P/S lower than the industry. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.

What We Can Learn From Kora Saúde Participações' P/S?

Kora Saúde Participações' P/S has taken a dip along with its share price. 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.

As expected, our analysis of Kora Saúde Participações' analyst forecasts confirms that the company's underwhelming revenue outlook is a major contributor to its low P/S. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

Having said that, be aware Kora Saúde Participações is showing 2 warning signs in our investment analysis, and 1 of those makes us a bit uncomfortable.

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.