SRV Yhtiöt Oyj (HEL:SRV1V) Looks Just Right With A 33% Price Jump

Despite an already strong run, SRV Yhtiöt Oyj (HEL:SRV1V) shares have been powering on, with a gain of 33% in the last thirty days. The last 30 days bring the annual gain to a very sharp 52%.

Even after such a large jump in price, it's still not a stretch to say that SRV Yhtiöt Oyj's price-to-sales (or "P/S") ratio of 0.2x right now seems quite "middle-of-the-road" compared to the Construction industry in Finland, where the median P/S ratio is around 0.4x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

Check out our latest analysis for SRV Yhtiöt Oyj

How SRV Yhtiöt Oyj Has Been Performing

With revenue that's retreating more than the industry's average of late, SRV Yhtiöt Oyj has been very sluggish. Perhaps the market is expecting future revenue performance to begin matching the rest of the industry, which has kept the P/S from declining. You'd much rather the company improve its revenue if you still believe in the business. Or at the very least, you'd be hoping it doesn't keep underperforming if your plan is to pick up some stock while it's not in favour.

Want the full picture on analyst estimates for the company? Then our free report on SRV Yhtiöt Oyj will help you uncover what's on the horizon.

How Is SRV Yhtiöt Oyj's Revenue Growth Trending?

The only time you'd be comfortable seeing a P/S like SRV Yhtiöt Oyj's is when the company's growth is tracking the industry closely.

Retrospectively, the last year delivered a frustrating 11% decrease to the company's top line. This means it has also seen a slide in revenue over the longer-term as revenue is down 33% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.

Looking ahead now, revenue is anticipated to climb by 9.8% per annum during the coming three years according to the dual analysts following the company. With the industry predicted to deliver 9.6% growth per year, the company is positioned for a comparable revenue result.

With this information, we can see why SRV Yhtiöt Oyj is trading at a fairly similar P/S to the industry. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

What We Can Learn From SRV Yhtiöt Oyj's P/S?

SRV Yhtiöt Oyj's stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. 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've seen that SRV Yhtiöt Oyj maintains an adequate P/S seeing as its revenue growth figures match the rest of the industry. 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. If all things remain constant, the possibility of a drastic share price movement remains fairly remote.

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

If you're unsure about the strength of SRV Yhtiöt Oyj's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.