Bellini Nautica S.p.A. (BIT:BELL) Looks Just Right With A 104% Price Jump

Bellini Nautica S.p.A. (BIT:BELL) shareholders have had their patience rewarded with a 104% share price jump in the last month. The last 30 days bring the annual gain to a very sharp 54%.

Since its price has surged higher, when almost half of the companies in Italy's Specialty Retail industry have price-to-sales ratios (or "P/S") below 0.4x, you may consider Bellini Nautica as a stock probably not worth researching with its 1.8x 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.

Check out our latest analysis for Bellini Nautica

How Has Bellini Nautica Performed Recently?

Bellini Nautica hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. 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 Bellini Nautica.

What Are Revenue Growth Metrics Telling Us About The High P/S?

Bellini Nautica's P/S ratio would be typical for a company that's expected to deliver solid growth, and importantly, perform better than the industry.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 5.9%. However, a few very strong years before that means that it was still able to grow revenue by an impressive 143% in total over the last three years. So we can start by confirming that the company has generally done a very good job of growing revenue over that time, even though it had some hiccups along the way.

Shifting to the future, estimates from the lone analyst covering the company suggest revenue should grow by 19% per annum over the next three years. With the industry only predicted to deliver 7.4% per annum, the company is positioned for a stronger revenue result.

In light of this, it's understandable that Bellini Nautica'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 Key Takeaway

The large bounce in Bellini Nautica's shares has lifted the company's P/S handsomely. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

Our look into Bellini Nautica 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 these conditions change, they will continue to provide strong support to the share price.

You need to take note of risks, for example - Bellini Nautica has 5 warning signs (and 2 which are potentially serious) we think you should know about.

If you're unsure about the strength of Bellini Nautica'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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com