Invibes Advertising N.V. (EPA:ALINV) Shares Slammed 26% But Getting In Cheap Might Be Difficult Regardless

Invibes Advertising N.V. (EPA:ALINV) shareholders that were waiting for something to happen have been dealt a blow with a 26% share price drop in the last month. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 16% in that time.

Although its price has dipped substantially, there still wouldn't be many who think Invibes Advertising's price-to-sales (or "P/S") ratio of 0.8x is worth a mention when the median P/S in France's Media industry is similar at about 0.7x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

Check out our latest analysis for Invibes Advertising

How Invibes Advertising Has Been Performing

Recent times haven't been great for Invibes Advertising as its revenue has been rising slower than most other companies. One possibility is that the P/S ratio is moderate because investors think this lacklustre revenue performance will turn around. However, if this isn't the case, investors might get caught out paying too much for the stock.

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

How Is Invibes Advertising's Revenue Growth Trending?

Invibes Advertising's P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.

If we review the last year of revenue growth, the company posted a worthy increase of 3.4%. Pleasingly, revenue has also lifted 151% in aggregate from three years ago, partly thanks to the last 12 months of growth. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Shifting to the future, estimates from the lone analyst covering the company suggest revenue should grow by 16% over the next year. With the industry predicted to deliver 14% growth , the company is positioned for a comparable revenue result.

With this information, we can see why Invibes Advertising is trading at a fairly similar P/S to the industry. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

The Bottom Line On Invibes Advertising's P/S

Following Invibes Advertising's share price tumble, its P/S is just clinging on to the industry median P/S. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

A Invibes Advertising's P/S seems about right to us given the knowledge that analysts are forecasting a revenue outlook that is similar to the Media industry. At this stage investors feel the potential for an improvement or deterioration in revenue isn't great enough to push P/S in a higher or lower direction. If all things remain constant, the possibility of a drastic share price movement remains fairly remote.

Before you settle on your opinion, we've discovered 3 warning signs for Invibes Advertising (2 are a bit concerning!) that you should be aware of.

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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