Investors Still Waiting For A Pull Back In Askoll EVA SpA (BIT:EVA)

When you see that almost half of the companies in the Auto industry in Italy have price-to-sales ratios (or "P/S") below 0.3x, Askoll EVA SpA (BIT:EVA) looks to be giving off some sell signals with its 0.9x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's as high as it is.

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Check out our latest analysis for Askoll EVA

What Does Askoll EVA's P/S Mean For Shareholders?

Askoll EVA could be doing better as its revenue has been going backwards lately while most other companies have been seeing positive revenue growth. Perhaps the market is expecting the poor revenue to reverse, justifying it's current high P/S.. If not, then existing shareholders may be extremely nervous about the viability of the share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Askoll EVA.

Is There Enough Revenue Growth Forecasted For Askoll EVA?

There's an inherent assumption that a company should outperform the industry for P/S ratios like Askoll EVA's to be considered reasonable.

Retrospectively, the last year delivered a frustrating 13% decrease to the company's top line. The last three years don't look nice either as the company has shrunk revenue by 52% in aggregate. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

Shifting to the future, estimates from the lone analyst covering the company suggest revenue should grow by 12% per year over the next three years. With the industry only predicted to deliver 3.6% each year, the company is positioned for a stronger revenue result.

In light of this, it's understandable that Askoll EVA's P/S sits above the majority of other companies. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

The Bottom Line On Askoll EVA's P/S

Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

Our look into Askoll EVA shows that its P/S ratio remains high on the merit of its strong future revenues. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

Before you take the next step, you should know about the 5 warning signs for Askoll EVA (4 are concerning!) that we have uncovered.

If these risks are making you reconsider your opinion on Askoll EVA, 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.