Slammed 25% Alfio Bardolla Training Group S.p.A. (BIT:ABTG) Screens Well Here But There Might Be A Catch

Alfio Bardolla Training Group S.p.A. (BIT:ABTG) shares have retraced a considerable 25% in the last month, reversing a fair amount of their solid recent performance. Longer-term, the stock has been solid despite a difficult 30 days, gaining 20% in the last year.

Although its price has dipped substantially, you could still be forgiven for feeling indifferent about Alfio Bardolla Training Group's P/S ratio of 0.7x, since the median price-to-sales (or "P/S") ratio for the Consumer Services industry in Italy is also close to 0.9x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

See our latest analysis for Alfio Bardolla Training Group

How Alfio Bardolla Training Group Has Been Performing

With revenue growth that's superior to most other companies of late, Alfio Bardolla Training Group has been doing relatively well. One possibility is that the P/S ratio is moderate because investors think this strong revenue performance might be about to tail off. 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 not quite in favour.

Want the full picture on analyst estimates for the company? Then our free report on Alfio Bardolla Training Group will help you uncover what's on the horizon.

How Is Alfio Bardolla Training Group's Revenue Growth Trending?

In order to justify its P/S ratio, Alfio Bardolla Training Group would need to produce growth that's similar to the industry.

Retrospectively, the last year delivered an exceptional 23% gain to the company's top line. The latest three year period has also seen an excellent 101% overall rise in revenue, aided by its short-term performance. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Turning to the outlook, the next three years should generate growth of 20% per year as estimated by the dual analysts watching the company. Meanwhile, the rest of the industry is forecast to only expand by 3.8% per year, which is noticeably less attractive.

With this information, we find it interesting that Alfio Bardolla Training Group is trading at a fairly similar P/S compared to the industry. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.

The Final Word

Following Alfio Bardolla Training Group's share price tumble, its P/S is just clinging on to the industry median P/S. 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.

Looking at Alfio Bardolla Training Group's analyst forecasts revealed that its superior revenue outlook isn't giving the boost to its P/S that we would've expected. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. This uncertainty seems to be reflected in the share price which, while stable, could be higher given the revenue forecasts.

We don't want to rain on the parade too much, but we did also find 5 warning signs for Alfio Bardolla Training Group (1 can't be ignored!) that you need to be mindful of.

It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).

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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.