Slammed 26% MINKABU THE INFONOID, Inc. (TSE:4436) Screens Well Here But There Might Be A Catch

Unfortunately for some shareholders, the MINKABU THE INFONOID, Inc. (TSE:4436) share price has dived 26% in the last thirty days, prolonging recent pain. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 45% share price drop.

In spite of the heavy fall in price, it's still not a stretch to say that MINKABU THE INFONOID's price-to-sales (or "P/S") ratio of 1.5x right now seems quite "middle-of-the-road" compared to the Capital Markets industry in Japan, where the median P/S ratio is around 2x. 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.

Check out our latest analysis for MINKABU THE INFONOID

How MINKABU THE INFONOID Has Been Performing

With revenue growth that's superior to most other companies of late, MINKABU THE INFONOID has been doing relatively well. 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.

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

Is There Some Revenue Growth Forecasted For MINKABU THE INFONOID?

MINKABU THE INFONOID's P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.

Taking a look back first, we see that the company grew revenue by an impressive 45% last year. Pleasingly, revenue has also lifted 139% in aggregate from three years ago, thanks to the last 12 months of growth. 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 13% per annum as estimated by the only analyst watching the company. Meanwhile, the rest of the industry is forecast to only expand by 3.4% per annum, which is noticeably less attractive.

With this information, we find it interesting that MINKABU THE INFONOID is trading at a fairly similar P/S compared to the industry. It may be that most investors aren't convinced the company can achieve future growth expectations.

What Does MINKABU THE INFONOID's P/S Mean For Investors?

MINKABU THE INFONOID's plummeting stock price has brought its P/S back to a similar region as the rest of the industry. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

We've established that MINKABU THE INFONOID currently trades on a lower than expected P/S since its forecasted revenue growth is higher than the wider industry. There could be some risks that the market is pricing in, which is preventing the P/S ratio from matching the positive outlook. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.

It is also worth noting that we have found 4 warning signs for MINKABU THE INFONOID (2 are significant!) that you need to take into consideration.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

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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.