There's No Escaping Plastiques du Val de Loire's (EPA:PVL) Muted Revenues Despite A 45% Share Price Rise

Plastiques du Val de Loire (EPA:PVL) shareholders have had their patience rewarded with a 45% share price jump in the last month. Looking further back, the 15% rise over the last twelve months isn't too bad notwithstanding the strength over the last 30 days.

Although its price has surged higher, Plastiques du Val de Loire may still be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 0.1x, since almost half of all companies in the Chemicals industry in France have P/S ratios greater than 1.2x and even P/S higher than 5x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

View our latest analysis for Plastiques du Val de Loire

What Does Plastiques du Val de Loire's Recent Performance Look Like?

Recent times have been advantageous for Plastiques du Val de Loire as its revenues have been rising faster than most other companies. It might be that many expect the strong revenue performance to degrade substantially, which has repressed the share price, and thus the P/S ratio. If the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.

Want the full picture on analyst estimates for the company? Then our free report on Plastiques du Val de Loire will help you uncover what's on the horizon.

Is There Any Revenue Growth Forecasted For Plastiques du Val de Loire?

There's an inherent assumption that a company should underperform the industry for P/S ratios like Plastiques du Val de Loire's to be considered reasonable.

Retrospectively, the last year delivered an exceptional 18% gain to the company's top line. Pleasingly, revenue has also lifted 32% in aggregate from three years ago, thanks to the last 12 months of growth. 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 1.0% per year during the coming three years according to the dual analysts following the company. That's shaping up to be materially lower than the 34% each year growth forecast for the broader industry.

In light of this, it's understandable that Plastiques du Val de Loire's P/S sits below the majority of other companies. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.

The Bottom Line On Plastiques du Val de Loire's P/S

Plastiques du Val de Loire's stock price has surged recently, but its but its P/S still remains modest. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

As we suspected, our examination of Plastiques du Val de Loire's analyst forecasts revealed that its inferior revenue outlook is contributing to its low P/S. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. It's hard to see the share price rising strongly in the near future under these circumstances.

You should always think about risks. Case in point, we've spotted 2 warning signs for Plastiques du Val de Loire you should be aware of, and 1 of them is a bit concerning.

If these risks are making you reconsider your opinion on Plastiques du Val de Loire, 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.