After Leaping 25% Duell Oyj (HEL:DUELL) Shares Are Not Flying Under The Radar

The Duell Oyj (HEL:DUELL) share price has done very well over the last month, posting an excellent gain of 25%. Still, the 30-day jump doesn't change the fact that longer term shareholders have seen their stock decimated by the 85% share price drop in the last twelve months.

In spite of the firm bounce in price, you could still be forgiven for feeling indifferent about Duell Oyj's P/S ratio of 0.4x, since the median price-to-sales (or "P/S") ratio for the Retail Distributors industry in Finland is about the same. 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.

See our latest analysis for Duell Oyj

How Duell Oyj Has Been Performing

Recent times haven't been great for Duell Oyj as its revenue has been rising slower than most other companies. Perhaps the market is expecting future revenue performance to lift, which has kept the P/S from declining. You'd really hope so, otherwise you're paying a relatively elevated price for a company with this sort of growth profile.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Duell Oyj.

How Is Duell Oyj's Revenue Growth Trending?

In order to justify its P/S ratio, Duell Oyj would need to produce growth that's similar to the industry.

If we review the last year of revenue growth, the company posted a worthy increase of 4.9%. This was backed up an excellent period prior to see revenue up by 62% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Turning to the outlook, the next three years should generate growth of 3.6% each year as estimated by the dual analysts watching the company. With the industry predicted to deliver 2.0% growth each year, the company is positioned for a comparable revenue result.

With this information, we can see why Duell Oyj is trading at a fairly similar P/S to the industry. It seems most investors are expecting to see average future growth and are only willing to pay a moderate amount for the stock.

What Does Duell Oyj's P/S Mean For Investors?

Duell Oyj's stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

A Duell Oyj's P/S seems about right to us given the knowledge that analysts are forecasting a revenue outlook that is similar to the Retail Distributors 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.

There are also other vital risk factors to consider and we've discovered 2 warning signs for Duell Oyj (1 shouldn't be ignored!) that you should be aware of before investing here.

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.