There Is A Reason Pierre et Vacances SA's (EPA:VAC) Price Is Undemanding

When you see that almost half of the companies in the Hospitality industry in France have price-to-sales ratios (or "P/S") above 1x, Pierre et Vacances SA (EPA:VAC) looks to be giving off some buy signals with its 0.3x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

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Check out our latest analysis for Pierre et Vacances

How Has Pierre et Vacances Performed Recently?

Recent times haven't been great for Pierre et Vacances as its revenue has been rising slower than most other companies. The P/S ratio is probably low because investors think this lacklustre revenue performance isn't going to get any better. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

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

How Is Pierre et Vacances' Revenue Growth Trending?

In order to justify its P/S ratio, Pierre et Vacances would need to produce sluggish growth that's trailing the industry.

If we review the last year of revenue, the company posted a result that saw barely any deviation from a year ago. Still, the latest three year period has seen an excellent 94% overall rise in revenue, in spite of its uninspiring short-term performance. Therefore, it's fair to say the revenue growth recently has been great for the company, but investors will want to ask why it has slowed to such an extent.

Shifting to the future, estimates from the six analysts covering the company suggest revenue should grow by 4.2% each year over the next three years. With the industry predicted to deliver 6.4% growth each year, the company is positioned for a weaker revenue result.

In light of this, it's understandable that Pierre et Vacances' P/S sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

The Key Takeaway

Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

As expected, our analysis of Pierre et Vacances' analyst forecasts confirms that the company's underwhelming revenue outlook is a major contributor to its low P/S. Shareholders' pessimism on the revenue prospects for the company seems to be the main contributor to the depressed P/S. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

Before you settle on your opinion, we've discovered 3 warning signs for Pierre et Vacances (1 can't be ignored!) that you should be aware of.

If these risks are making you reconsider your opinion on Pierre et Vacances, 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.