Pullup Entertainment Société anonyme (EPA:ALPUL) Held Back By Insufficient Growth Even After Shares Climb 27%

Pullup Entertainment Société anonyme (EPA:ALPUL) shares have continued their recent momentum with a 27% gain in the last month alone. The annual gain comes to 106% following the latest surge, making investors sit up and take notice.

Even after such a large jump in price, when close to half the companies operating in France's Entertainment industry have price-to-sales ratios (or "P/S") above 1.1x, you may still consider Pullup Entertainment Société anonyme as an enticing stock to check out with its 0.5x P/S ratio. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

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View our latest analysis for Pullup Entertainment Société anonyme

What Does Pullup Entertainment Société anonyme's Recent Performance Look Like?

Recent times have been pleasing for Pullup Entertainment Société anonyme as its revenue has risen in spite of the industry's average revenue going into reverse. One possibility is that the P/S ratio is low because investors think the company's revenue is going to fall away like everyone else's soon. Those who are bullish on Pullup Entertainment Société anonyme will be hoping that this isn't the case and the company continues to beat out the industry.

Keen to find out how analysts think Pullup Entertainment Société anonyme's future stacks up against the industry? In that case, our free report is a great place to start.

How Is Pullup Entertainment Société anonyme's Revenue Growth Trending?

The only time you'd be truly comfortable seeing a P/S as low as Pullup Entertainment Société anonyme's is when the company's growth is on track to lag the industry.

Taking a look back first, we see that the company grew revenue by an impressive 108% last year. Pleasingly, revenue has also lifted 174% in aggregate from three years ago, thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing revenue over that time.

Shifting to the future, estimates from the four analysts covering the company suggest revenue growth is heading into negative territory, declining 11% per annum over the next three years. That's not great when the rest of the industry is expected to grow by 3.0% each year.

With this in consideration, we find it intriguing that Pullup Entertainment Société anonyme's P/S is closely matching its industry peers. However, shrinking revenues are unlikely to lead to a stable P/S over the longer term. Even just maintaining these prices could be difficult to achieve as the weak outlook is weighing down the shares.

The Bottom Line On Pullup Entertainment Société anonyme's P/S

Despite Pullup Entertainment Société anonyme's share price climbing recently, its P/S still lags most other companies. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

It's clear to see that Pullup Entertainment Société anonyme maintains its low P/S on the weakness of its forecast for sliding revenue, as expected. As other companies in the industry are forecasting revenue growth, Pullup Entertainment Société anonyme's poor outlook justifies its low P/S ratio. Unless there's material change, it's hard to envision a situation where the stock price will rise drastically.

You should always think about risks. Case in point, we've spotted 4 warning signs for Pullup Entertainment Société anonyme you should be aware of, and 1 of them can't be ignored.

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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.