Bertrandt Aktiengesellschaft (ETR:BDT) Surges 29% Yet Its Low P/S Is No Reason For Excitement

The Bertrandt Aktiengesellschaft (ETR:BDT) share price has done very well over the last month, posting an excellent gain of 29%. But the last month did very little to improve the 54% share price decline over the last year.

Although its price has surged higher, considering around half the companies operating in Germany's Professional Services industry have price-to-sales ratios (or "P/S") above 0.8x, you may still consider Bertrandt as an solid investment opportunity with its 0.2x P/S ratio. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

View our latest analysis for Bertrandt

What Does Bertrandt's Recent Performance Look Like?

Recent revenue growth for Bertrandt has been in line with the industry. One possibility is that the P/S ratio is low because investors think this modest revenue performance may begin to slide. If not, then existing shareholders have reason to be optimistic about the future direction of the share price.

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

How Is Bertrandt's Revenue Growth Trending?

In order to justify its P/S ratio, Bertrandt would need to produce sluggish growth that's trailing the industry.

If we review the last year of revenue growth, the company posted a worthy increase of 2.5%. This was backed up an excellent period prior to see revenue up by 40% in total over the last three years. So we can start by confirming that the company has done a great job of growing revenues over that time.

Looking ahead now, revenue is anticipated to climb by 2.2% each year during the coming three years according to the four analysts following the company. That's shaping up to be materially lower than the 6.4% each year growth forecast for the broader industry.

With this in consideration, its clear as to why Bertrandt's P/S is falling short industry peers. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

What Does Bertrandt's P/S Mean For Investors?

Bertrandt's stock price has surged recently, but its but its P/S still remains modest. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

We've established that Bertrandt maintains its low P/S on the weakness of its forecast growth being lower than the wider industry, as expected. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. It's hard to see the share price rising strongly in the near future under these circumstances.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Bertrandt that you need to be mindful 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.