Investors Interested In Remedy Entertainment Oyj's (HEL:REMEDY) Revenues

Remedy Entertainment Oyj's (HEL:REMEDY) price-to-sales (or "P/S") ratio of 4.9x may look like a poor investment opportunity when you consider close to half the companies in the Entertainment industry in Finland have P/S ratios below 1.5x. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so lofty.

View our latest analysis for Remedy Entertainment Oyj

What Does Remedy Entertainment Oyj's P/S Mean For Shareholders?

Remedy Entertainment Oyj could be doing better as it's been growing revenue less than most other companies lately. It might be that many expect the uninspiring revenue performance to recover significantly, which has kept the P/S ratio from collapsing. If not, then existing shareholders may be very nervous about the viability of the share price.

Keen to find out how analysts think Remedy Entertainment Oyj's future stacks up against the industry? In that case, our free report is a great place to start.

How Is Remedy Entertainment Oyj's Revenue Growth Trending?

There's an inherent assumption that a company should far outperform the industry for P/S ratios like Remedy Entertainment Oyj's to be considered reasonable.

Retrospectively, the last year delivered a decent 5.1% gain to the company's revenues. Ultimately though, it couldn't turn around the poor performance of the prior period, with revenue shrinking 12% in total over the last three years. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

Looking ahead now, revenue is anticipated to climb by 20% each year during the coming three years according to the two analysts following the company. Meanwhile, the rest of the industry is forecast to only expand by 6.8% each year, which is noticeably less attractive.

With this in mind, it's not hard to understand why Remedy Entertainment Oyj's P/S is high relative to its industry peers. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

The Final Word

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.

Our look into Remedy Entertainment 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 these conditions change, they will continue to provide strong support to the share price.

Many other vital risk factors can be found on the company's balance sheet. Our free balance sheet analysis for Remedy Entertainment Oyj with six simple checks will allow you to discover any risks that could be an issue.

It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).

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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.