Market Participants Recognise Enogia SAS' (EPA:ALENO) Revenues Pushing Shares 36% Higher

Despite an already strong run, Enogia SAS (EPA:ALENO) shares have been powering on, with a gain of 36% in the last thirty days. The annual gain comes to 126% following the latest surge, making investors sit up and take notice.

Since its price has surged higher, given close to half the companies operating in France's Electrical industry have price-to-sales ratios (or "P/S") below 0.8x, you may consider Enogia SAS as a stock to potentially avoid with its 2.7x P/S ratio. However, the P/S might be high for a reason and it requires further investigation to determine if it's justified.

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View our latest analysis for Enogia SAS

How Enogia SAS Has Been Performing

Enogia SAS certainly has been doing a good job lately as it's been growing revenue more than most other companies. It seems that many are expecting the strong revenue performance to persist, which has raised the P/S. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

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

What Are Revenue Growth Metrics Telling Us About The High P/S?

The only time you'd be truly comfortable seeing a P/S as high as Enogia SAS' is when the company's growth is on track to outshine the industry.

Retrospectively, the last year delivered an exceptional 41% gain to the company's top line. The strong recent performance means it was also able to grow revenue by 136% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Looking ahead now, revenue is anticipated to climb by 29% per annum during the coming three years according to the lone analyst following the company. Meanwhile, the rest of the industry is forecast to only expand by 6.3% per year, which is noticeably less attractive.

With this in mind, it's not hard to understand why Enogia SAS' 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

Enogia SAS shares have taken a big step in a northerly direction, but its P/S is elevated as a result. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

As we suspected, our examination of Enogia SAS' analyst forecasts revealed that its superior revenue outlook is contributing to its high P/S. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. It's hard to see the share price falling strongly in the near future under these circumstances.

Before you take the next step, you should know about the 3 warning signs for Enogia SAS (1 is concerning!) that we have uncovered.

If these risks are making you reconsider your opinion on Enogia SAS, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.