A Piece Of The Puzzle Missing From Electra Consumer Products (1970) Ltd's (TLV:ECP) Share Price

Electra Consumer Products (1970) Ltd's (TLV:ECP) price-to-sales (or "P/S") ratio of 0.3x may look like a pretty appealing investment opportunity when you consider close to half the companies in the Consumer Durables industry in Israel have P/S ratios greater than 1.8x. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

View our latest analysis for Electra Consumer Products (1970)

What Does Electra Consumer Products (1970)'s Recent Performance Look Like?

Electra Consumer Products (1970) has been doing a good job lately as it's been growing revenue at a solid pace. Perhaps the market is expecting this acceptable revenue performance to take a dive, which has kept the P/S suppressed. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

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 Electra Consumer Products (1970)'s earnings, revenue and cash flow.

Is There Any Revenue Growth Forecasted For Electra Consumer Products (1970)?

There's an inherent assumption that a company should underperform the industry for P/S ratios like Electra Consumer Products (1970)'s to be considered reasonable.

Retrospectively, the last year delivered a decent 14% gain to the company's revenues. This was backed up an excellent period prior to see revenue up by 59% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Comparing that recent medium-term revenue trajectory with the industry's one-year growth forecast of 6.2% shows it's noticeably more attractive.

In light of this, it's peculiar that Electra Consumer Products (1970)'s P/S sits below the majority of other companies. Apparently some shareholders believe the recent performance has exceeded its limits and have been accepting significantly lower selling prices.

The Final Word

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.

Our examination of Electra Consumer Products (1970) revealed its three-year revenue trends aren't boosting its P/S anywhere near as much as we would have predicted, given they look better than current industry expectations. Potential investors that are sceptical over continued revenue performance may be preventing the P/S ratio from matching previous strong performance. At least price risks look to be very low if recent medium-term revenue trends continue, but investors seem to think future revenue could see a lot of volatility.

It is also worth noting that we have found 2 warning signs for Electra Consumer Products (1970) (1 is potentially serious!) that you need to take into consideration.

If you're unsure about the strength of Electra Consumer Products (1970)'s business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.