After Leaping 66% Almonty Industries Inc. (TSE:AII) Shares Are Not Flying Under The Radar

Despite an already strong run, Almonty Industries Inc. (TSE:AII) shares have been powering on, with a gain of 66% in the last thirty days. The last month tops off a massive increase of 200% in the last year.

Since its price has surged higher, when almost half of the companies in Canada's Metals and Mining industry have price-to-sales ratios (or "P/S") below 2.9x, you may consider Almonty Industries as a stock not worth researching with its 18.1x 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 so lofty.

Check out our latest analysis for Almonty Industries

How Has Almonty Industries Performed Recently?

Recent revenue growth for Almonty Industries has been in line with the industry. Perhaps the market is expecting future revenue performance to improve, justifying the currently elevated P/S. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

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

Is There Enough Revenue Growth Forecasted For Almonty Industries?

Almonty Industries' P/S ratio would be typical for a company that's expected to deliver very strong growth, and importantly, perform much better than the industry.

If we review the last year of revenue growth, the company posted a terrific increase of 17%. Pleasingly, revenue has also lifted 31% in aggregate from three years ago, thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing revenue over that time.

Shifting to the future, estimates from the only analyst covering the company suggest revenue should grow by 137% each year over the next three years. That's shaping up to be materially higher than the 39% each year growth forecast for the broader industry.

With this in mind, it's not hard to understand why Almonty Industries' P/S is high relative to its industry peers. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

The Bottom Line On Almonty Industries' P/S

The strong share price surge has lead to Almonty Industries' P/S soaring as well. 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.

As we suspected, our examination of Almonty Industries' analyst forecasts revealed that its superior revenue outlook is contributing to its high P/S. At this stage investors feel the potential for a deterioration in revenues is quite remote, justifying the elevated P/S ratio. Unless these conditions change, they will continue to provide strong support to the share price.

Before you settle on your opinion, we've discovered 1 warning sign for Almonty Industries that you should be aware of.

Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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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.