Quartix Technologies plc (LON:QTX) Looks Just Right With A 28% Price Jump

Quartix Technologies plc (LON:QTX) shares have had a really impressive month, gaining 28% after a shaky period beforehand. Looking further back, the 14% rise over the last twelve months isn't too bad notwithstanding the strength over the last 30 days.

Although its price has surged higher, it's still not a stretch to say that Quartix Technologies' price-to-sales (or "P/S") ratio of 2.8x right now seems quite "middle-of-the-road" compared to the Software industry in the United Kingdom, where the median P/S ratio is around 2.4x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

Check out our latest analysis for Quartix Technologies

What Does Quartix Technologies' P/S Mean For Shareholders?

Recent revenue growth for Quartix Technologies has been in line with the industry. It seems that many are expecting the mediocre revenue performance to persist, which has held the P/S ratio back. Those who are bullish on Quartix Technologies will be hoping that revenue performance can pick up, so that they can pick up the stock at a slightly lower valuation.

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

What Are Revenue Growth Metrics Telling Us About The P/S?

In order to justify its P/S ratio, Quartix Technologies would need to produce growth that's similar to the industry.

If we review the last year of revenue growth, the company posted a worthy increase of 8.9%. The latest three year period has also seen a 24% overall rise in revenue, aided somewhat by its short-term performance. Therefore, it's fair to say the revenue growth recently has been respectable for the company.

Turning to the outlook, the next three years should generate growth of 7.7% per annum as estimated by the dual analysts watching the company. Meanwhile, the rest of the industry is forecast to expand by 8.6% per annum, which is not materially different.

In light of this, it's understandable that Quartix Technologies' P/S sits in line with the majority of other companies. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

What We Can Learn From Quartix Technologies' P/S?

Quartix Technologies' stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. 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.

We've seen that Quartix Technologies maintains an adequate P/S seeing as its revenue growth figures match the rest of the industry. Right now shareholders are comfortable with the P/S as they are quite confident future revenue won't throw up any surprises. If all things remain constant, the possibility of a drastic share price movement remains fairly remote.

A lot of potential risks can sit within a company's balance sheet. You can assess many of the main risks through our free balance sheet analysis for Quartix Technologies with six simple checks.

It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).

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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.