It's A Story Of Risk Vs Reward With Log-In Logística Intermodal S.A. (BVMF:LOGN3)

There wouldn't be many who think Log-In Logística Intermodal S.A.'s (BVMF:LOGN3) price-to-sales (or "P/S") ratio of 1.7x is worth a mention when the median P/S for the Shipping industry in Brazil is very similar. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

Check out our latest analysis for Log-In Logística Intermodal

How Log-In Logística Intermodal Has Been Performing

With revenue growth that's inferior to most other companies of late, Log-In Logística Intermodal 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 Log-In Logística Intermodal will help you uncover what's on the horizon.

How Is Log-In Logística Intermodal's Revenue Growth Trending?

In order to justify its P/S ratio, Log-In Logística Intermodal would need to produce growth that's similar to the industry.

If we review the last year of revenue growth, the company posted a worthy increase of 7.2%. This was backed up an excellent period prior to see revenue up by 108% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Shifting to the future, estimates from the one analyst covering the company suggest revenue should grow by 12% over the next year. That's shaping up to be materially higher than the 6.6% growth forecast for the broader industry.

In light of this, it's curious that Log-In Logística Intermodal's P/S sits in line with the majority of other companies. It may be that most investors aren't convinced the company can achieve future growth expectations.

The Key Takeaway

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.

Looking at Log-In Logística Intermodal's analyst forecasts revealed that its superior revenue outlook isn't giving the boost to its P/S that we would've expected. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. This uncertainty seems to be reflected in the share price which, while stable, could be higher given the revenue forecasts.

It's always necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Log-In Logística Intermodal (at least 1 which is potentially serious), and understanding these should be part of your investment process.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com