Some Groupe LDLC société anonyme (EPA:ALLDL) Shareholders Look For Exit As Shares Take 25% Pounding

Groupe LDLC société anonyme (EPA:ALLDL) shares have had a horrible month, losing 25% after a relatively good period beforehand. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 51% loss during that time.

Even after such a large drop in price, you could still be forgiven for feeling indifferent about Groupe LDLC société anonyme's P/S ratio of 0.1x, since the median price-to-sales (or "P/S") ratio for the Specialty Retail industry in France is also close to 0.3x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

See our latest analysis for Groupe LDLC société anonyme

What Does Groupe LDLC société anonyme's P/S Mean For Shareholders?

Groupe LDLC société anonyme's revenue growth of late has been pretty similar to most other companies. It seems that many are expecting the mediocre revenue performance to persist, which has held the P/S ratio back. If this is the case, then at least existing shareholders won't be losing sleep over the current share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Groupe LDLC société anonyme.

Is There Some Revenue Growth Forecasted For Groupe LDLC société anonyme?

The only time you'd be comfortable seeing a P/S like Groupe LDLC société anonyme's is when the company's growth is tracking the industry closely.

Taking a look back first, we see that there was hardly any revenue growth to speak of for the company over the past year. This isn't what shareholders were looking for as it means they've been left with a 21% decline in revenue over the last three years in total. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.

Shifting to the future, estimates from the three analysts covering the company suggest revenue should grow by 3.7% per year over the next three years. Meanwhile, the rest of the industry is forecast to expand by 7.6% each year, which is noticeably more attractive.

With this information, we find it interesting that Groupe LDLC société anonyme is trading at a fairly similar P/S compared to the industry. It seems most investors are ignoring the fairly limited growth expectations and are willing to pay up for exposure to the stock. Maintaining these prices will be difficult to achieve as this level of revenue growth is likely to weigh down the shares eventually.

What Does Groupe LDLC société anonyme's P/S Mean For Investors?

Following Groupe LDLC société anonyme's share price tumble, its P/S is just clinging on to the industry median P/S. 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.

When you consider that Groupe LDLC société anonyme's revenue growth estimates are fairly muted compared to the broader industry, it's easy to see why we consider it unexpected to be trading at its current P/S ratio. At present, we aren't confident in the P/S as the predicted future revenues aren't likely to support a more positive sentiment for long. A positive change is needed in order to justify the current price-to-sales ratio.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Groupe LDLC société anonyme that you need to be mindful of.

If these risks are making you reconsider your opinion on Groupe LDLC société anonyme, 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.