Seri Industrial S.p.A.'s (BIT:SERI) Shares Not Telling The Full Story

With a median price-to-sales (or "P/S") ratio of close to 0.7x in the Chemicals industry in Italy, you could be forgiven for feeling indifferent about Seri Industrial S.p.A.'s (BIT:SERI) P/S ratio, which comes in at about the same. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

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Check out our latest analysis for Seri Industrial

How Seri Industrial Has Been Performing

Seri Industrial certainly has been doing a good job lately as it's been growing revenue more than most other companies. It might be that many expect the strong revenue performance to wane, which has kept the P/S ratio from rising. 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.

Keen to find out how analysts think Seri Industrial's future stacks up against the industry? In that case, our free report is a great place to start.

How Is Seri Industrial's Revenue Growth Trending?

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

If we review the last year of revenue growth, the company posted a terrific increase of 20%. The strong recent performance means it was also able to grow revenue by 34% 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.

Shifting to the future, estimates from the two analysts covering the company suggest revenue should grow by 59% over the next year. Meanwhile, the rest of the industry is forecast to only expand by 8.5%, which is noticeably less attractive.

With this information, we find it interesting that Seri Industrial 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

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.

Despite enticing revenue growth figures that outpace the industry, Seri Industrial's P/S isn't quite what we'd expect. 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. It appears some are indeed anticipating revenue instability, because these conditions should normally provide a boost to the share price.

Having said that, be aware Seri Industrial is showing 4 warning signs in our investment analysis, and 3 of those don't sit too well with us.

If you're unsure about the strength of Seri Industrial'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.