Aya Gold & Silver Inc. (TSE:AYA) Shares Slammed 27% But Getting In Cheap Might Be Difficult Regardless

Aya Gold & Silver Inc. (TSE:AYA) shareholders won't be pleased to see that the share price has had a very rough month, dropping 27% and undoing the prior period's positive performance. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 32% share price drop.

Even after such a large drop in price, when almost half of the companies in Canada's Metals and Mining industry have price-to-sales ratios (or "P/S") below 3.1x, you may still consider Aya Gold & Silver as a stock not worth researching with its 20.8x P/S ratio. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.

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View our latest analysis for Aya Gold & Silver

How Has Aya Gold & Silver Performed Recently?

While the industry has experienced revenue growth lately, Aya Gold & Silver's revenue has gone into reverse gear, which is not great. Perhaps the market is expecting the poor revenue to reverse, justifying it's current high 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 Aya Gold & Silver will help you uncover what's on the horizon.

How Is Aya Gold & Silver's Revenue Growth Trending?

The only time you'd be truly comfortable seeing a P/S as steep as Aya Gold & Silver's is when the company's growth is on track to outshine the industry decidedly.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 8.7%. This has soured the latest three-year period, which nevertheless managed to deliver a decent 14% overall rise in revenue. Although it's been a bumpy ride, it's still fair to say the revenue growth recently has been mostly respectable for the company.

Shifting to the future, estimates from the five analysts covering the company suggest revenue should grow by 85% each year over the next three years. Meanwhile, the rest of the industry is forecast to only expand by 54% each year, which is noticeably less attractive.

With this in mind, it's not hard to understand why Aya Gold & Silver's P/S is high relative to its industry peers. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Bottom Line On Aya Gold & Silver's P/S

Aya Gold & Silver's shares may have suffered, but its P/S remains high. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

Our look into Aya Gold & Silver shows that its P/S ratio remains high on the merit of its strong future revenues. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. Unless these conditions change, they will continue to provide strong support to the share price.

There are also other vital risk factors to consider before investing and we've discovered 1 warning sign for Aya Gold & Silver that you should be aware of.

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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.