Positive Sentiment Still Eludes Imagesat International (I.S.I) Ltd (TLV:ISI) Following 26% Share Price Slump

The Imagesat International (I.S.I) Ltd (TLV:ISI) share price has fared very poorly over the last month, falling by a substantial 26%. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 23% in that time.

In spite of the heavy fall in price, you could still be forgiven for feeling indifferent about Imagesat International (I.S.I)'s P/S ratio of 3x, since the median price-to-sales (or "P/S") ratio for the Aerospace & Defense industry in Israel is also close to 3.2x. 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.

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View our latest analysis for Imagesat International (I.S.I)

What Does Imagesat International (I.S.I)'s Recent Performance Look Like?

Recent times have been advantageous for Imagesat International (I.S.I) as its revenues have been rising faster than most other companies. Perhaps the market is expecting this level of performance to taper off, keeping the P/S from soaring. If the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Imagesat International (I.S.I) .

How Is Imagesat International (I.S.I)'s Revenue Growth Trending?

Imagesat International (I.S.I)'s P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.

If we review the last year of revenue growth, the company posted a terrific increase of 32%. Pleasingly, revenue has also lifted 60% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 45% during the coming year according to the only analyst following the company. Meanwhile, the rest of the industry is forecast to only expand by 37%, which is noticeably less attractive.

With this in consideration, we find it intriguing that Imagesat International (I.S.I)'s P/S is closely matching its industry peers. It may be that most investors aren't convinced the company can achieve future growth expectations.

What We Can Learn From Imagesat International (I.S.I)'s P/S?

Imagesat International (I.S.I)'s plummeting stock price has brought its P/S back to a similar region as the rest of the industry. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

Looking at Imagesat International (I.S.I)'s analyst forecasts revealed that its superior revenue outlook isn't giving the boost to its P/S that we would've expected. When we see a strong revenue outlook, with growth outpacing the industry, we can only assume potential uncertainty around these figures are what might be placing slight pressure on the P/S ratio. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.

The company's balance sheet is another key area for risk analysis. Take a look at our free balance sheet analysis for Imagesat International (I.S.I) with six simple checks on some of these key factors.

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.