Teleste Oyj (HEL:TLT1V) Stock Rockets 29% But Many Are Still Ignoring The Company

Teleste Oyj (HEL:TLT1V) shares have continued their recent momentum with a 29% gain in the last month alone. The last 30 days bring the annual gain to a very sharp 68%.

Although its price has surged higher, when close to half the companies operating in Finland's Communications industry have price-to-sales ratios (or "P/S") above 1.2x, you may still consider Teleste Oyj as an enticing stock to check out 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.

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View our latest analysis for Teleste Oyj

What Does Teleste Oyj's Recent Performance Look Like?

There hasn't been much to differentiate Teleste Oyj's and the industry's revenue growth lately. It might be that many expect the mediocre revenue performance to degrade, which has repressed the P/S ratio. Those who are bullish on Teleste Oyj will be hoping that this isn't the case.

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Is There Any Revenue Growth Forecasted For Teleste Oyj?

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

Retrospectively, the last year delivered virtually the same number to the company's top line as the year before. Whilst it's an improvement, it wasn't enough to get the company out of the hole it was in, with revenue down 8.8% overall from three years ago. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

Turning to the outlook, the next three years should generate growth of 7.6% each year as estimated by the lone analyst watching the company. Meanwhile, the rest of the industry is forecast to only expand by 3.3% per annum, which is noticeably less attractive.

With this information, we find it odd that Teleste Oyj is trading at a P/S lower than the industry. It looks like most investors are not convinced at all that the company can achieve future growth expectations.

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

Despite Teleste Oyj's share price climbing recently, its P/S still lags most other companies. 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.

Teleste Oyj's analyst forecasts revealed that its superior revenue outlook isn't contributing to its P/S anywhere near as much as we would have predicted. When we see strong growth forecasts like this, we can only assume potential risks are what might be placing significant pressure on the P/S ratio. While the possibility of the share price plunging seems unlikely due to the high growth forecasted for the company, the market does appear to have some hesitation.

You need to take note of risks, for example - Teleste Oyj has 3 warning signs (and 1 which is significant) we think you should know about.

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.