Stock Analysis

FLYHT Aerospace Solutions Ltd. (CVE:FLY) Might Not Be As Mispriced As It Looks

TSXV:FLY
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FLYHT Aerospace Solutions Ltd.'s (CVE:FLY) price-to-sales (or "P/S") ratio of 1.7x might make it look like a buy right now compared to the Aerospace & Defense industry in Canada, where around half of the companies have P/S ratios above 2.6x and even P/S above 10x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

See our latest analysis for FLYHT Aerospace Solutions

ps-multiple-vs-industry
TSXV:FLY Price to Sales Ratio vs Industry April 17th 2023

What Does FLYHT Aerospace Solutions' P/S Mean For Shareholders?

FLYHT Aerospace Solutions certainly has been doing a good job lately as it's been growing revenue more than most other companies. It might be that many expect the strong revenue performance to degrade substantially, which has repressed the share price, and thus the P/S ratio. If the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.

Want the full picture on analyst estimates for the company? Then our free report on FLYHT Aerospace Solutions will help you uncover what's on the horizon.

How Is FLYHT Aerospace Solutions' Revenue Growth Trending?

The only time you'd be truly comfortable seeing a P/S as low as FLYHT Aerospace Solutions' is when the company's growth is on track to lag the industry.

Taking a look back first, we see that the company grew revenue by an impressive 111% last year. The latest three year period has also seen a 13% overall rise in revenue, aided extensively by its short-term performance. Therefore, it's fair to say the revenue growth recently has been respectable for the company.

Turning to the outlook, the next year should generate growth of 17% as estimated by the only analyst watching the company. That's shaping up to be similar to the 15% growth forecast for the broader industry.

In light of this, it's peculiar that FLYHT Aerospace Solutions' P/S sits below the majority of other companies. Apparently some shareholders are doubtful of the forecasts and have been accepting lower selling prices.

The Bottom Line On FLYHT Aerospace Solutions' 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 examination of FLYHT Aerospace Solutions' revealed that its P/S remains low despite analyst forecasts of revenue growth matching the wider industry. The low P/S could be an indication that the revenue growth estimates are being questioned by the market. However, if you agree with the analysts' forecasts, you may be able to pick up the stock at an attractive price.

Before you take the next step, you should know about the 3 warning signs for FLYHT Aerospace Solutions (1 makes us a bit uncomfortable!) that we have uncovered.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

Valuation is complex, but we're helping make it simple.

Find out whether FLYHT Aerospace Solutions is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.