Americas Gold and Silver Corporation's (TSE:USA) Shares Leap 26% Yet They're Still Not Telling The Full Story

The Americas Gold and Silver Corporation (TSE:USA) share price has done very well over the last month, posting an excellent gain of 26%. But the last month did very little to improve the 50% share price decline over the last year.

Although its price has surged higher, Americas Gold and Silver may still look like a strong buying opportunity at present with its price-to-sales (or "P/S") ratio of 0.8x, considering almost half of all companies in the Metals and Mining industry in Canada have P/S ratios greater than 3.1x and even P/S higher than 16x aren't out of the ordinary. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so limited.

View our latest analysis for Americas Gold and Silver

What Does Americas Gold and Silver's Recent Performance Look Like?

With revenue growth that's inferior to most other companies of late, Americas Gold and Silver has been relatively sluggish. 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.

Want the full picture on analyst estimates for the company? Then our free report on Americas Gold and Silver will help you uncover what's on the horizon.

Is There Any Revenue Growth Forecasted For Americas Gold and Silver?

There's an inherent assumption that a company should far underperform the industry for P/S ratios like Americas Gold and Silver's to be considered reasonable.

If we review the last year of revenue growth, the company posted a worthy increase of 5.3%. Pleasingly, revenue has also lifted 221% in aggregate from three years ago, partly thanks to the last 12 months of growth. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Shifting to the future, estimates from the one analyst covering the company suggest revenue should grow by 31% over the next year. With the industry only predicted to deliver 12%, the company is positioned for a stronger revenue result.

With this in consideration, we find it intriguing that Americas Gold and Silver's P/S sits behind most of its industry peers. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.

What We Can Learn From Americas Gold and Silver's P/S?

Shares in Americas Gold and Silver have risen appreciably however, its P/S is still subdued. 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.

Americas Gold and Silver's analyst forecasts revealed that its superior revenue outlook isn't contributing to its P/S anywhere near as much as we would have predicted. There could be some major risk factors that are placing downward pressure on the P/S ratio. At least price risks look to be very low, but investors seem to think future revenues could see a lot of volatility.

Having said that, be aware Americas Gold and Silver is showing 3 warning signs in our investment analysis, and 1 of those is concerning.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.