Stock Analysis

FLYHT Aerospace Solutions Ltd.'s (CVE:FLY) Prospects Need A Boost To Lift Shares

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FLYHT Aerospace Solutions Ltd.'s (CVE:FLY) price-to-sales (or "P/S") ratio of 0.9x 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 2.2x and even P/S above 7x are quite common. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

Check out our latest analysis for FLYHT Aerospace Solutions

TSXV:FLY Price to Sales Ratio vs Industry April 28th 2024

What Does FLYHT Aerospace Solutions' Recent Performance Look Like?

FLYHT Aerospace Solutions could be doing better as its revenue has been going backwards lately while most other companies have been seeing positive revenue growth. The P/S ratio is probably low because investors think this poor revenue performance isn't going to get any better. If you still like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

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.

What Are Revenue Growth Metrics Telling Us About The Low P/S?

FLYHT Aerospace Solutions' P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.

Retrospectively, the last year delivered a frustrating 16% decrease to the company's top line. Still, the latest three year period has seen an excellent 48% overall rise in revenue, in spite of its unsatisfying short-term performance. Although it's been a bumpy ride, it's still fair to say the revenue growth recently has been more than adequate for the company.

Turning to the outlook, the next year should generate growth of 4.4% as estimated by the one analyst watching the company. Meanwhile, the rest of the industry is forecast to expand by 7.4%, which is noticeably more attractive.

With this information, we can see why FLYHT Aerospace Solutions 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.

The Bottom Line On FLYHT Aerospace Solutions' P/S

While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

As expected, our analysis of FLYHT Aerospace Solutions' analyst forecasts confirms that the company's underwhelming revenue outlook is a major contributor to its low P/S. Shareholders' pessimism on the revenue prospects for the company seems to be the main contributor to the depressed P/S. The company will need a change of fortune to justify the P/S rising higher in the future.

Before you take the next step, you should know about the 3 warning signs for FLYHT Aerospace Solutions (1 is significant!) 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.