SSR Mining Inc. (TSE:SSRM) Shares Fly 28% But Investors Aren't Buying For Growth

Despite an already strong run, SSR Mining Inc. (TSE:SSRM) shares have been powering on, with a gain of 28% in the last thirty days. The last month tops off a massive increase of 277% in the last year.

Even after such a large jump in price, SSR Mining may still be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 3.4x, since almost half of all companies in the Metals and Mining industry in Canada have P/S ratios greater than 4.8x and even P/S higher than 31x are not unusual. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

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View our latest analysis for SSR Mining

How SSR Mining Has Been Performing

SSR Mining could be doing better as it's been growing revenue less than most other companies lately. Perhaps the market is expecting the current trend of poor revenue growth to continue, which has kept the P/S suppressed. If you still like the company, you'd be hoping revenue doesn't get any worse and that you could pick up some stock while it's out of favour.

Keen to find out how analysts think SSR Mining's future stacks up against the industry? In that case, our free report is a great place to start.

How Is SSR Mining's Revenue Growth Trending?

There's an inherent assumption that a company should underperform the industry for P/S ratios like SSR Mining's to be considered reasonable.

Taking a look back first, we see that the company managed to grow revenues by a handy 6.2% last year. However, this wasn't enough as the latest three year period has seen an unpleasant 7.3% overall drop in revenue. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 33% during the coming year according to the seven analysts following the company. With the industry predicted to deliver 41% growth, the company is positioned for a weaker revenue result.

With this information, we can see why SSR Mining 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 Final Word

Despite SSR Mining'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.

As we suspected, our examination of SSR Mining's analyst forecasts revealed that its inferior revenue outlook is contributing to its low P/S. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

Plus, you should also learn about this 1 warning sign we've spotted with SSR Mining.

If you're unsure about the strength of SSR Mining'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.