A Piece Of The Puzzle Missing From Harboes Bryggeri A/S' (CPH:HARB B) 48% Share Price Climb

Despite an already strong run, Harboes Bryggeri A/S (CPH:HARB B) shares have been powering on, with a gain of 48% in the last thirty days. The last month tops off a massive increase of 243% in the last year.

In spite of the firm bounce in price, considering around half the companies operating in Denmark's Beverage industry have price-to-sales ratios (or "P/S") above 1.4x, you may still consider Harboes Bryggeri as an solid investment opportunity with its 0.6x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

See our latest analysis for Harboes Bryggeri

What Does Harboes Bryggeri's Recent Performance Look Like?

Revenue has risen firmly for Harboes Bryggeri recently, which is pleasing to see. It might be that many expect the respectable revenue performance to degrade substantially, which has repressed the P/S. 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 out of favour.

Although there are no analyst estimates available for Harboes Bryggeri, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.

How Is Harboes Bryggeri's Revenue Growth Trending?

Harboes Bryggeri's P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.

Retrospectively, the last year delivered a decent 10% gain to the company's revenues. Pleasingly, revenue has also lifted 32% in aggregate from three years ago, partly thanks to the last 12 months of growth. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Comparing that recent medium-term revenue trajectory with the industry's one-year growth forecast of 3.4% shows it's noticeably more attractive.

With this in mind, we find it intriguing that Harboes Bryggeri's P/S isn't as high compared to that of its industry peers. Apparently some shareholders believe the recent performance has exceeded its limits and have been accepting significantly lower selling prices.

What We Can Learn From Harboes Bryggeri's P/S?

Harboes Bryggeri's stock price has surged recently, but its but its P/S still remains modest. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

We're very surprised to see Harboes Bryggeri currently trading on a much lower than expected P/S since its recent three-year growth is higher than the wider industry forecast. Potential investors that are sceptical over continued revenue performance may be preventing the P/S ratio from matching previous strong performance. At least price risks look to be very low if recent medium-term revenue trends continue, but investors seem to think future revenue could see a lot of volatility.

Plus, you should also learn about this 1 warning sign we've spotted with Harboes Bryggeri.

Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com