Kiriacoulis Mediterranean Cruises Shipping SA's (ATH:KYRI) Price Is Right But Growth Is Lacking After Shares Rocket 30%

Kiriacoulis Mediterranean Cruises Shipping SA (ATH:KYRI) shareholders have had their patience rewarded with a 30% share price jump in the last month. Taking a wider view, although not as strong as the last month, the full year gain of 21% is also fairly reasonable.

Although its price has surged higher, when around half the companies operating in Greece's Hospitality industry have price-to-sales ratios (or "P/S") above 6x, you may still consider Kiriacoulis Mediterranean Cruises Shipping as an incredibly enticing stock to check out with its 0.3x P/S ratio. However, the P/S might be quite low for a reason and it requires further investigation to determine if it's justified.

View our latest analysis for Kiriacoulis Mediterranean Cruises Shipping

How Kiriacoulis Mediterranean Cruises Shipping Has Been Performing

Kiriacoulis Mediterranean Cruises Shipping certainly has been doing a great job lately as it's been growing its revenue at a really rapid pace. It might be that many expect the strong revenue performance to degrade substantially, which has repressed the P/S ratio. Those who are bullish on Kiriacoulis Mediterranean Cruises Shipping will be hoping that this isn't the case, so that they can pick up the stock at a lower valuation.

Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Kiriacoulis Mediterranean Cruises Shipping will help you shine a light on its historical performance.

Is There Any Revenue Growth Forecasted For Kiriacoulis Mediterranean Cruises Shipping?

In order to justify its P/S ratio, Kiriacoulis Mediterranean Cruises Shipping would need to produce anemic growth that's substantially trailing the industry.

Retrospectively, the last year delivered an exceptional 43% gain to the company's top line. The strong recent performance means it was also able to grow revenue by 46% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Comparing that to the industry, which is predicted to deliver 80% growth in the next 12 months, the company's momentum is weaker, based on recent medium-term annualised revenue results.

In light of this, it's understandable that Kiriacoulis Mediterranean Cruises Shipping's P/S sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on to something they believe will continue to trail the wider industry.

The Bottom Line On Kiriacoulis Mediterranean Cruises Shipping's P/S

Kiriacoulis Mediterranean Cruises Shipping's recent share price jump still sees fails to bring its P/S alongside the industry median. 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.

As we suspected, our examination of Kiriacoulis Mediterranean Cruises Shipping revealed its three-year revenue trends are contributing to its low P/S, given they look worse than current industry expectations. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. Unless the recent medium-term conditions improve, they will continue to form a barrier for the share price around these levels.

It's always necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with Kiriacoulis Mediterranean Cruises Shipping (at least 3 which are a bit unpleasant), and understanding these should be part of your investment process.

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.