The Market Lifts MiniLuxe Holding Corp. (CVE:MNLX) Shares 67% But It Can Do More

MiniLuxe Holding Corp. (CVE:MNLX) shareholders would be excited to see that the share price has had a great month, posting a 67% gain and recovering from prior weakness. The last month tops off a massive increase of 178% in the last year.

Even after such a large jump in price, when close to half the companies operating in Canada's Consumer Services industry have price-to-sales ratios (or "P/S") above 3x, you may still consider MiniLuxe Holding as an enticing stock to check out with its 2.1x 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.

Check out our latest analysis for MiniLuxe Holding

How Has MiniLuxe Holding Performed Recently?

The revenue growth achieved at MiniLuxe Holding over the last year would be more than acceptable for most companies. One possibility is that the P/S is low because investors think this respectable revenue growth might actually underperform the broader industry in the near future. If you 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 earnings, revenue and cash flow for the company? Then our free report on MiniLuxe Holding will help you shine a light on its historical performance.

Is There Any Revenue Growth Forecasted For MiniLuxe Holding?

In order to justify its P/S ratio, MiniLuxe Holding 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 10% last year. This was backed up an excellent period prior to see revenue up by 106% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

This is in contrast to the rest of the industry, which is expected to grow by 13% over the next year, materially lower than the company's recent medium-term annualised growth rates.

In light of this, it's peculiar that MiniLuxe Holding's P/S sits below the majority of other companies. Apparently some shareholders believe the recent performance has exceeded its limits and have been accepting significantly lower selling prices.

The Final Word

Despite MiniLuxe Holding's share price climbing recently, its P/S still lags most other companies. 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.

Our examination of MiniLuxe Holding revealed its three-year revenue trends aren't boosting its P/S anywhere near as much as we would have predicted, given they look better than current industry expectations. Potential investors that are sceptical over continued revenue performance may be preventing the P/S ratio from matching previous strong performance. It appears many are indeed anticipating revenue instability, because the persistence of these recent medium-term conditions would normally provide a boost to the share price.

And what about other risks? Every company has them, and we've spotted 4 warning signs for MiniLuxe Holding (of which 2 shouldn't be ignored!) you should know about.

If you're unsure about the strength of MiniLuxe Holding's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.