With Hoffmann Green Cement Technologies Societe anonyme (EPA:ALHGR) It Looks Like You'll Get What You Pay For

When you see that almost half of the companies in the Basic Materials industry in France have price-to-sales ratios (or "P/S") below 1.1x, Hoffmann Green Cement Technologies Societe anonyme (EPA:ALHGR) looks to be giving off strong sell signals with its 5.7x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.

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Check out our latest analysis for Hoffmann Green Cement Technologies Societe anonyme

How Has Hoffmann Green Cement Technologies Societe anonyme Performed Recently?

With revenue growth that's superior to most other companies of late, Hoffmann Green Cement Technologies Societe anonyme has been doing relatively well. It seems the market expects this form will continue into the future, hence the elevated P/S ratio. If not, then existing shareholders might be a little nervous about the viability of the share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Hoffmann Green Cement Technologies Societe anonyme.

How Is Hoffmann Green Cement Technologies Societe anonyme's Revenue Growth Trending?

In order to justify its P/S ratio, Hoffmann Green Cement Technologies Societe anonyme would need to produce outstanding growth that's well in excess of the industry.

Taking a look back first, we see that the company grew revenue by an impressive 119% last year. This great performance means it was also able to deliver immense revenue growth over the last three years. So we can start by confirming that the company has done a tremendous job of growing revenue over that time.

Turning to the outlook, the next three years should generate growth of 21% per annum as estimated by the dual analysts watching the company. With the industry only predicted to deliver 0.1% per annum, the company is positioned for a stronger revenue result.

With this in mind, it's not hard to understand why Hoffmann Green Cement Technologies Societe anonyme's P/S is high relative to its industry peers. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Bottom Line On Hoffmann Green Cement Technologies Societe anonyme's P/S

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 Hoffmann Green Cement Technologies Societe anonyme's 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. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

Don't forget that there may be other risks. For instance, we've identified 3 warning signs for Hoffmann Green Cement Technologies Societe anonyme (1 doesn't sit too well with us) you should be aware of.

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.