Shareholders Should Be Pleased With TrenDevice S.p.A.'s (BIT:TD) Price

With a median price-to-sales (or "P/S") ratio of close to 0.2x in the Specialty Retail industry in Italy, you could be forgiven for feeling indifferent about TrenDevice S.p.A.'s (BIT:TD) P/S ratio, which comes in at about the same. 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 TrenDevice

What Does TrenDevice's Recent Performance Look Like?

With revenue growth that's superior to most other companies of late, TrenDevice 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.

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

How Is TrenDevice's Revenue Growth Trending?

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

If we review the last year of revenue growth, the company posted a terrific increase of 25%. The latest three year period has also seen an excellent 176% 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 year should generate growth of 10% as estimated by the one analyst watching the company. That's shaping up to be similar to the 9.0% growth forecast for the broader industry.

In light of this, it's understandable that TrenDevice's P/S sits in line with the majority of other companies. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

What Does TrenDevice's P/S Mean For Investors?

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.

We've seen that TrenDevice maintains an adequate P/S seeing as its revenue growth figures match the rest of the industry. Right now shareholders are comfortable with the P/S as they are quite confident future revenue won't throw up any surprises. Unless these conditions change, they will continue to support the share price at these levels.

Before you settle on your opinion, we've discovered 4 warning signs for TrenDevice (2 shouldn't be ignored!) that you should be aware of.

If you're unsure about the strength of TrenDevice'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.