Hydrogen-Refueling-Solutions SA (EPA:ALHRS) Shares Slammed 28% But Getting In Cheap Might Be Difficult Regardless

Unfortunately for some shareholders, the Hydrogen-Refueling-Solutions SA (EPA:ALHRS) share price has dived 28% in the last thirty days, prolonging recent pain. For any long-term shareholders, the last month ends a year to forget by locking in a 82% share price decline.

Although its price has dipped substantially, you could still be forgiven for thinking Hydrogen-Refueling-Solutions is a stock not worth researching with a price-to-sales ratios (or "P/S") of 1.9x, considering almost half the companies in France's Machinery industry have P/S ratios below 0.9x. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's as high as it is.

See our latest analysis for Hydrogen-Refueling-Solutions

How Has Hydrogen-Refueling-Solutions Performed Recently?

Hydrogen-Refueling-Solutions hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. One possibility is that the P/S ratio is high because investors think this poor revenue performance will turn the corner. If not, then existing shareholders may be extremely nervous about the viability of the share price.

Want the full picture on analyst estimates for the company? Then our free report on Hydrogen-Refueling-Solutions will help you uncover what's on the horizon.

Is There Enough Revenue Growth Forecasted For Hydrogen-Refueling-Solutions?

Hydrogen-Refueling-Solutions' P/S ratio would be typical for a company that's expected to deliver solid growth, and importantly, perform better than the industry.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 18%. Even so, admirably revenue has lifted 136% in aggregate from three years ago, notwithstanding the last 12 months. Although it's been a bumpy ride, it's still fair to say the revenue growth recently has been more than adequate for the company.

Shifting to the future, estimates from the four analysts covering the company suggest revenue should grow by 30% each year over the next three years. That's shaping up to be materially higher than the 5.2% per year growth forecast for the broader industry.

In light of this, it's understandable that Hydrogen-Refueling-Solutions' P/S sits above the majority of other companies. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

The Bottom Line On Hydrogen-Refueling-Solutions' P/S

Despite the recent share price weakness, Hydrogen-Refueling-Solutions' P/S remains higher than most other companies in the industry. 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.

Our look into Hydrogen-Refueling-Solutions shows that its P/S ratio remains high on the merit of its strong future revenues. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. Unless these conditions change, they will continue to provide strong support to the share price.

You need to take note of risks, for example - Hydrogen-Refueling-Solutions has 3 warning signs (and 1 which is potentially serious) we think you should know about.

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.