Endomines Finland Oyj's (HEL:PAMPALO) 27% Cheaper Price Remains In Tune With Revenues

Explore Endomines Finland Oyj's Fair Values from the Community and select yours

The Endomines Finland Oyj (HEL:PAMPALO) share price has softened a substantial 27% over the previous 30 days, handing back much of the gains the stock has made lately. The good news is that in the last year, the stock has shone bright like a diamond, gaining 234%.

In spite of the heavy fall in price, you could still be forgiven for thinking Endomines Finland Oyj is a stock to steer clear of with a price-to-sales ratios (or "P/S") of 10.6x, considering almost half the companies in Finland's Metals and Mining industry have P/S ratios below 0.7x. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Check out our latest analysis for Endomines Finland Oyj

How Endomines Finland Oyj Has Been Performing

Recent revenue growth for Endomines Finland Oyj has been in line with the industry. Perhaps the market is expecting future revenue performance to improve, justifying the currently elevated P/S. If not, then existing shareholders may be a little nervous about the viability of the share price.

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

How Is Endomines Finland Oyj's Revenue Growth Trending?

In order to justify its P/S ratio, Endomines Finland Oyj would need to produce outstanding growth that's well in excess of the industry.

Taking a look back first, we see that the company grew revenue by an impressive 46% last year. Spectacularly, three year revenue growth has ballooned by several orders of magnitude, thanks in part to the last 12 months of revenue growth. Accordingly, shareholders would have been over the moon with those medium-term rates of revenue growth.

Shifting to the future, estimates from the dual analysts covering the company suggest revenue should grow by 30% per year over the next three years. That's shaping up to be materially higher than the 2.7% per year growth forecast for the broader industry.

With this information, we can see why Endomines Finland Oyj is trading at such a high P/S compared to the industry. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

What We Can Learn From Endomines Finland Oyj's P/S?

Endomines Finland Oyj's shares may have suffered, but its P/S remains high. 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.

Our look into Endomines Finland Oyj shows that its P/S ratio remains high on the merit of its strong future revenues. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

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

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

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

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.