Gabriel Holding A/S (CPH:GABR) Stock Rockets 25% But Many Are Still Ignoring The Company

Gabriel Holding A/S (CPH:GABR) shares have had a really impressive month, gaining 25% after a shaky period beforehand. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 34% in the last twelve months.

Even after such a large jump in price, you could still be forgiven for feeling indifferent about Gabriel Holding's P/S ratio of 0.7x, since the median price-to-sales (or "P/S") ratio for the Luxury industry in Denmark is about the same. 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.

Our free stock report includes 2 warning signs investors should be aware of before investing in Gabriel Holding. Read for free now.

See our latest analysis for Gabriel Holding

How Gabriel Holding Has Been Performing

With revenue growth that's superior to most other companies of late, Gabriel Holding has been doing relatively well. One possibility is that the P/S ratio is moderate because investors think this strong revenue performance might be about to tail off. 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 Gabriel Holding.

Is There Some Revenue Growth Forecasted For Gabriel Holding?

There's an inherent assumption that a company should be matching the industry for P/S ratios like Gabriel Holding's to be considered reasonable.

Taking a look back first, we see that the company grew revenue by an impressive 49% last year. However, this wasn't enough as the latest three year period has seen the company endure a nasty 44% drop in revenue in aggregate. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.

Shifting to the future, estimates from the only analyst covering the company suggest revenue should grow by 28% per annum over the next three years. That's shaping up to be materially higher than the 6.9% each year growth forecast for the broader industry.

With this information, we find it interesting that Gabriel Holding is trading at a fairly similar P/S compared to the industry. It may be that most investors aren't convinced the company can achieve future growth expectations.

What Does Gabriel Holding's P/S Mean For Investors?

Its shares have lifted substantially and now Gabriel Holding'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.

We've established that Gabriel Holding currently trades on a lower than expected P/S since its forecasted revenue growth is higher than the wider industry. When we see a strong revenue outlook, with growth outpacing the industry, we can only assume potential uncertainty around these figures are what might be placing slight pressure on the P/S ratio. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.

You should always think about risks. Case in point, we've spotted 2 warning signs for Gabriel Holding you should be aware of, and 1 of them doesn't sit too well with us.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.