Further Upside For ÉPDUFERR Nyilvánosan Muködo Részvénytársaság (BUSE:EPDUFERR) Shares Could Introduce Price Risks After 26% Bounce

ÉPDUFERR Nyilvánosan Muködo Részvénytársaság (BUSE:EPDUFERR) shares have continued their recent momentum with a 26% gain in the last month alone. The last 30 days bring the annual gain to a very sharp 43%.

In spite of the firm bounce in price, there still wouldn't be many who think ÉPDUFERR Nyilvánosan Muködo Részvénytársaság's price-to-sales (or "P/S") ratio of 0.5x is worth a mention when it essentially matches the median P/S in Hungary's Construction industry. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

View our latest analysis for ÉPDUFERR Nyilvánosan Muködo Részvénytársaság

How ÉPDUFERR Nyilvánosan Muködo Részvénytársaság Has Been Performing

Recent times have been quite advantageous for ÉPDUFERR Nyilvánosan Muködo Részvénytársaság as its revenue has been rising very briskly. The P/S is probably moderate because investors think this strong revenue growth might not be enough to outperform the broader industry in the near future. Those who are bullish on ÉPDUFERR Nyilvánosan Muködo Részvénytársaság 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 ÉPDUFERR Nyilvánosan Muködo Részvénytársaság will help you shine a light on its historical performance.

Do Revenue Forecasts Match The P/S Ratio?

In order to justify its P/S ratio, ÉPDUFERR Nyilvánosan Muködo Részvénytársaság would need to produce growth that's similar to the industry.

If we review the last year of revenue growth, the company posted a terrific increase of 31%. Pleasingly, revenue has also lifted 72% in aggregate from three years ago, thanks to the last 12 months of growth. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Comparing that recent medium-term revenue trajectory with the industry's one-year growth forecast of 7.8% shows it's noticeably more attractive.

In light of this, it's curious that ÉPDUFERR Nyilvánosan Muködo Részvénytársaság's P/S sits in line with the majority of other companies. Apparently some shareholders believe the recent performance is at its limits and have been accepting lower selling prices.

The Final Word

Its shares have lifted substantially and now ÉPDUFERR Nyilvánosan Muködo Részvénytársaság's P/S is back within range of the industry median. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

We didn't quite envision ÉPDUFERR Nyilvánosan Muködo Részvénytársaság's P/S sitting in line with the wider industry, considering the revenue growth over the last three-year is higher than the current industry outlook. There could be some unobserved threats to revenue preventing the P/S ratio from matching this positive performance. At least the risk of a price drop looks to be subdued if recent medium-term revenue trends continue, but investors seem to think future revenue could see some volatility.

You always need to take note of risks, for example - ÉPDUFERR Nyilvánosan Muködo Részvénytársaság has 5 warning signs we think you should be aware of.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

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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.

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