Taiheiyo Cement Corporation's (TSE:5233) Popularity With Investors Is Clear

There wouldn't be many who think Taiheiyo Cement Corporation's (TSE:5233) price-to-sales (or "P/S") ratio of 0.5x is worth a mention when the median P/S for the Basic Materials industry in Japan is very similar. 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 Taiheiyo Cement

How Taiheiyo Cement Has Been Performing

Taiheiyo Cement 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 not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

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

How Is Taiheiyo Cement's Revenue Growth Trending?

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

Taking a look back first, we see that the company managed to grow revenues by a handy 9.5% last year. Although, the latest three year period in total hasn't been as good as it didn't manage to provide any growth at all. So it appears to us that the company has had a mixed result in terms of growing revenue over that time.

Looking ahead now, revenue is anticipated to climb by 4.5% per year during the coming three years according to the six analysts following the company. With the industry predicted to deliver 4.2% growth each year, the company is positioned for a comparable revenue result.

With this in mind, it makes sense that Taiheiyo Cement's P/S is closely matching its industry peers. It seems most investors are expecting to see average future growth and are only willing to pay a moderate amount for the stock.

The Bottom Line On Taiheiyo Cement's P/S

Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

We've seen that Taiheiyo Cement 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. If all things remain constant, the possibility of a drastic share price movement remains fairly remote.

It is also worth noting that we have found 1 warning sign for Taiheiyo Cement 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.

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