Why Investors Shouldn't Be Surprised By Thunderbird Entertainment Group Inc.'s (CVE:TBRD) 31% Share Price Surge
Thunderbird Entertainment Group Inc. (CVE:TBRD) shareholders would be excited to see that the share price has had a great month, posting a 31% gain and recovering from prior weakness. But the gains over the last month weren't enough to make shareholders whole, as the share price is still down 7.9% in the last twelve months.
In spite of the firm bounce in price, there still wouldn't be many who think Thunderbird Entertainment Group's price-to-sales (or "P/S") ratio of 0.5x is worth a mention when it essentially matches the median P/S in Canada's Entertainment industry. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.
Check out our latest analysis for Thunderbird Entertainment Group
What Does Thunderbird Entertainment Group's P/S Mean For Shareholders?
With its revenue growth in positive territory compared to the declining revenue of most other companies, Thunderbird Entertainment Group has been doing quite well of late. Perhaps the market is expecting its current strong performance to taper off in accordance to the rest of the industry, which has kept the P/S contained. Those who are bullish on Thunderbird Entertainment Group will be hoping that this isn't the case, so that they can pick up the stock at a slightly lower valuation.
Want the full picture on analyst estimates for the company? Then our free report on Thunderbird Entertainment Group will help you uncover what's on the horizon.Is There Some Revenue Growth Forecasted For Thunderbird Entertainment Group?
Thunderbird Entertainment Group's P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.
Taking a look back first, we see that the company grew revenue by an impressive 26% last year. The strong recent performance means it was also able to grow revenue by 45% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.
Turning to the outlook, the next year should generate growth of 14% as estimated by the one analyst watching the company. Meanwhile, the rest of the industry is forecast to expand by 15%, which is not materially different.
With this in mind, it makes sense that Thunderbird Entertainment Group's P/S is closely matching its industry peers. It seems most investors are expecting to see average future growth and are only willing to pay a moderate amount for the stock.
The Key Takeaway
Its shares have lifted substantially and now Thunderbird Entertainment Group's P/S is back within range of the industry median. 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.
Our look at Thunderbird Entertainment Group's revenue growth estimates show that its P/S is about what we expect, as both metrics follow closely with the industry averages. At this stage investors feel the potential for an improvement or deterioration in revenue isn't great enough to push P/S in a higher or lower direction. All things considered, if the P/S and revenue estimates contain no major shocks, then it's hard to see the share price moving strongly in either direction in the near future.
Before you settle on your opinion, we've discovered 1 warning sign for Thunderbird Entertainment Group that you should be aware of.
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.
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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.