Laxmi Goldorna House Limited's (NSE:LGHL) 27% Jump Shows Its Popularity With Investors

Laxmi Goldorna House Limited (NSE:LGHL) shareholders would be excited to see that the share price has had a great month, posting a 27% gain and recovering from prior weakness. The annual gain comes to 105% following the latest surge, making investors sit up and take notice.

In spite of the firm bounce in price, there still wouldn't be many who think Laxmi Goldorna House's price-to-sales (or "P/S") ratio of 7.4x is worth a mention when the median P/S in India's Real Estate industry is similar at about 7x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

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See our latest analysis for Laxmi Goldorna House

How Has Laxmi Goldorna House Performed Recently?

Laxmi Goldorna House 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 wane, which has kept the share price, and thus the P/S ratio, from rising. Those who are bullish on Laxmi Goldorna House 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 Laxmi Goldorna House will help you shine a light on its historical performance.

Is There Some Revenue Growth Forecasted For Laxmi Goldorna House?

The only time you'd be comfortable seeing a P/S like Laxmi Goldorna House's is when the company's growth is tracking the industry closely.

Retrospectively, the last year delivered an exceptional 189% gain to the company's top line. The strong recent performance means it was also able to grow revenue by 210% in total over the last three years. So we can start by confirming that the company has done a great job of growing revenue over that time.

Weighing that recent medium-term revenue trajectory against the broader industry's one-year forecast for expansion of 44% shows it's about the same on an annualised basis.

In light of this, it's understandable that Laxmi Goldorna House's P/S sits in line with the majority of other companies. Apparently shareholders are comfortable to simply hold on assuming the company will continue keeping a low profile.

The Key Takeaway

Laxmi Goldorna House appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry 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.

It appears to us that Laxmi Goldorna House maintains its moderate P/S off the back of its recent three-year growth being in line with the wider industry forecast. Currently, with a past revenue trend that aligns closely wit the industry outlook, shareholders are confident the company's future revenue outlook won't contain any major surprises. Unless the recent medium-term conditions change, they will continue to support the share price at these levels.

Before you settle on your opinion, we've discovered 3 warning signs for Laxmi Goldorna House (1 shouldn't be ignored!) that 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.