Why We're Not Concerned Yet About Juventus Football Club S.p.A.'s (BIT:JUVE) 27% Share Price Plunge

The Juventus Football Club S.p.A. (BIT:JUVE) share price has fared very poorly over the last month, falling by a substantial 27%. For any long-term shareholders, the last month ends a year to forget by locking in a 51% share price decline.

Even after such a large drop in price, when almost half of the companies in Italy's Entertainment industry have price-to-sales ratios (or "P/S") below 0.6x, you may still consider Juventus Football Club as a stock probably not worth researching with its 1.6x P/S ratio. However, the P/S might be high for a reason and it requires further investigation to determine if it's justified.

View our latest analysis for Juventus Football Club

What Does Juventus Football Club's P/S Mean For Shareholders?

Recent times haven't been great for Juventus Football Club as its revenue has been falling quicker than most other companies. One possibility is that the P/S ratio is high because investors think the company will turn things around completely and accelerate past most others in the industry. However, if this isn't the case, investors might get caught out paying too much for the stock.

Want the full picture on analyst estimates for the company? Then our free report on Juventus Football Club will help you uncover what's on the horizon.

Is There Enough Revenue Growth Forecasted For Juventus Football Club?

In order to justify its P/S ratio, Juventus Football Club would need to produce impressive growth in excess of the industry.

Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 16%. This means it has also seen a slide in revenue over the longer-term as revenue is down 18% in total over the last three years. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 16% per year during the coming three years according to the one analyst following the company. With the industry only predicted to deliver 11% each year, the company is positioned for a stronger revenue result.

With this information, we can see why Juventus Football Club is trading at such a high P/S compared to the industry. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Bottom Line On Juventus Football Club's P/S

Juventus Football Club's P/S remain high even after its stock plunged. 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 look into Juventus Football Club shows that its P/S ratio remains high on the merit of its strong future revenues. At this stage investors feel the potential for a deterioration in revenues is quite remote, justifying the elevated P/S ratio. It's hard to see the share price falling strongly in the near future under these circumstances.

It is also worth noting that we have found 3 warning signs for Juventus Football Club that you need to take into consideration.

If these risks are making you reconsider your opinion on Juventus Football Club, 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.