A Piece Of The Puzzle Missing From iomart Group plc's (LON:IOM) 41% Share Price Climb

iomart Group plc (LON:IOM) shares have had a really impressive month, gaining 41% after a shaky period beforehand. But the last month did very little to improve the 72% share price decline over the last year.

Although its price has surged higher, given about half the companies operating in the United Kingdom's IT industry have price-to-sales ratios (or "P/S") above 1.4x, you may still consider iomart Group as an attractive investment with its 0.2x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

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See our latest analysis for iomart Group

How Has iomart Group Performed Recently?

Recent times haven't been great for iomart Group as its revenue has been rising slower than most other companies. It seems that many are expecting the uninspiring revenue performance to persist, which has repressed the growth of the P/S ratio. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

Want the full picture on analyst estimates for the company? Then our free report on iomart Group will help you uncover what's on the horizon.

How Is iomart Group's Revenue Growth Trending?

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

Retrospectively, the last year delivered a decent 13% gain to the company's revenues. This was backed up an excellent period prior to see revenue up by 39% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Turning to the outlook, the next three years should generate growth of 5.0% per annum as estimated by the five analysts watching the company. With the industry predicted to deliver 5.2% growth per year, the company is positioned for a comparable revenue result.

With this in consideration, we find it intriguing that iomart Group's P/S is lagging behind its industry peers. It may be that most investors are not convinced the company can achieve future growth expectations.

What We Can Learn From iomart Group's P/S?

iomart Group'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.

It looks to us like the P/S figures for iomart Group remain low despite growth that is expected to be in line with other companies in the industry. The low P/S could be an indication that the revenue growth estimates are being questioned by the market. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.

Plus, you should also learn about these 3 warning signs we've spotted with iomart Group (including 1 which shouldn't be ignored).

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.