Iktinos Hellas S.A. Greek Marble Industry Technical and Touristic Company's (ATH:IKTIN) Share Price Not Quite Adding Up

When close to half the companies in the Metals and Mining industry in Greece have price-to-sales ratios (or "P/S") below 0.2x, you may consider Iktinos Hellas S.A. Greek Marble Industry Technical and Touristic Company (ATH:IKTIN) as a stock to potentially avoid with its 1.4x P/S ratio. However, the P/S might be high for a reason and it requires further investigation to determine if it's justified.

Check out our latest analysis for Iktinos Hellas Greek Marble Industry Technical and Touristic

How Iktinos Hellas Greek Marble Industry Technical and Touristic Has Been Performing

For example, consider that Iktinos Hellas Greek Marble Industry Technical and Touristic's financial performance has been poor lately as its revenue has been in decline. It might be that many expect the company to still outplay most other companies over the coming period, which has kept the P/S from collapsing. However, if this isn't the case, investors might get caught out paying too much for the stock.

We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Iktinos Hellas Greek Marble Industry Technical and Touristic's earnings, revenue and cash flow.

How Is Iktinos Hellas Greek Marble Industry Technical and Touristic's Revenue Growth Trending?

In order to justify its P/S ratio, Iktinos Hellas Greek Marble Industry Technical and Touristic would need to produce impressive growth in excess of the industry.

Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 11%. This means it has also seen a slide in revenue over the longer-term as revenue is down 30% in total over the last three years. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

In contrast to the company, the rest of the industry is expected to grow by 2.0% over the next year, which really puts the company's recent medium-term revenue decline into perspective.

With this in mind, we find it worrying that Iktinos Hellas Greek Marble Industry Technical and Touristic's P/S exceeds that of its industry peers. It seems most investors are ignoring the recent poor growth rate and are hoping for a turnaround in the company's business prospects. Only the boldest would assume these prices are sustainable as a continuation of recent revenue trends is likely to weigh heavily on the share price eventually.

The Bottom Line On Iktinos Hellas Greek Marble Industry Technical and Touristic's P/S

Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

We've established that Iktinos Hellas Greek Marble Industry Technical and Touristic currently trades on a much higher than expected P/S since its recent revenues have been in decline over the medium-term. Right now we aren't comfortable with the high P/S as this revenue performance is highly unlikely to support such positive sentiment for long. If recent medium-term revenue trends continue, it will place shareholders' investments at significant risk and potential investors in danger of paying an excessive premium.

You should always think about risks. Case in point, we've spotted 5 warning signs for Iktinos Hellas Greek Marble Industry Technical and Touristic you should be aware of, and 3 of them shouldn't be ignored.

If these risks are making you reconsider your opinion on Iktinos Hellas Greek Marble Industry Technical and Touristic, 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.