Friedrich Vorwerk Group SE's (ETR:VH2) Shares Leap 29% Yet They're Still Not Telling The Full Story

Friedrich Vorwerk Group SE (ETR:VH2) shareholders have had their patience rewarded with a 29% share price jump in the last month. The last month tops off a massive increase of 135% in the last year.

Although its price has surged higher, there still wouldn't be many who think Friedrich Vorwerk Group's price-to-sales (or "P/S") ratio of 1.5x is worth a mention when the median P/S in Germany's Oil and Gas industry is similar at about 1.2x. 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.

View our latest analysis for Friedrich Vorwerk Group

What Does Friedrich Vorwerk Group's Recent Performance Look Like?

With its revenue growth in positive territory compared to the declining revenue of most other companies, Friedrich Vorwerk Group has been doing quite well of late. It might be that many expect the strong revenue performance to deteriorate like the rest, which has kept the P/S ratio from rising. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Friedrich Vorwerk Group.

What Are Revenue Growth Metrics Telling Us About The P/S?

In order to justify its P/S ratio, Friedrich Vorwerk Group would need to produce growth that's similar to the industry.

Taking a look back first, we see that the company managed to grow revenues by a handy 14% last year. This was backed up an excellent period prior to see revenue up by 57% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Looking ahead now, revenue is anticipated to climb by 17% during the coming year according to the four analysts following the company. With the industry only predicted to deliver 2.0%, the company is positioned for a stronger revenue result.

With this in consideration, we find it intriguing that Friedrich Vorwerk Group's P/S is closely matching its industry peers. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.

What Does Friedrich Vorwerk Group's P/S Mean For Investors?

Friedrich Vorwerk Group 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.

Looking at Friedrich Vorwerk Group's analyst forecasts revealed that its superior revenue outlook isn't giving the boost to its P/S that we would've expected. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. It appears some are indeed anticipating revenue instability, because these conditions should normally provide a boost to the share price.

You always need to take note of risks, for example - Friedrich Vorwerk Group has 1 warning sign we think 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.