What Silver X Mining Corp.'s (CVE:AGX) 41% Share Price Gain Is Not Telling You

Silver X Mining Corp. (CVE:AGX) shares have continued their recent momentum with a 41% gain in the last month alone. The last month tops off a massive increase of 285% in the last year.

Even after such a large jump in price, there still wouldn't be many who think Silver X Mining's price-to-sales (or "P/S") ratio of 7.3x is worth a mention when the median P/S in Canada's Metals and Mining industry is similar at about 6.8x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

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View our latest analysis for Silver X Mining

How Has Silver X Mining Performed Recently?

With revenue growth that's inferior to most other companies of late, Silver X Mining has been relatively sluggish. It might be that many expect the uninspiring revenue performance to strengthen positively, which has kept the P/S ratio from falling. You'd really hope so, otherwise you're paying a relatively elevated price for a company with this sort of growth profile.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Silver X Mining.

How Is Silver X Mining's Revenue Growth Trending?

The only time you'd be comfortable seeing a P/S like Silver X Mining's is when the company's growth is tracking the industry closely.

If we review the last year of revenue growth, the company posted a worthy increase of 5.4%. This was backed up an excellent period prior to see revenue up by 78% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Shifting to the future, estimates from the sole analyst covering the company suggest revenue should grow by 22% over the next year. That's shaping up to be materially lower than the 52% growth forecast for the broader industry.

In light of this, it's curious that Silver X Mining's P/S sits in line with the majority of other companies. It seems most investors are ignoring the fairly limited growth expectations and are willing to pay up for exposure to the stock. These shareholders may be setting themselves up for future disappointment if the P/S falls to levels more in line with the growth outlook.

The Final Word

Silver X Mining appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry 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 at the analysts forecasts of Silver X Mining's revenue prospects has shown that its inferior revenue outlook isn't negatively impacting its P/S as much as we would have predicted. At present, we aren't confident in the P/S as the predicted future revenues aren't likely to support a more positive sentiment for long. A positive change is needed in order to justify the current price-to-sales ratio.

Before you settle on your opinion, we've discovered 2 warning signs for Silver X Mining (1 is concerning!) 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.