Market Participants Recognise SoftBank Group Corp.'s (TSE:9984) Revenues Pushing Shares 27% Higher

SoftBank Group Corp. (TSE:9984) shares have had a really impressive month, gaining 27% after a shaky period beforehand. The bad news is that even after the stocks recovery in the last 30 days, shareholders are still underwater by about 4.6% over the last year.

Although its price has surged higher, it's still not a stretch to say that SoftBank Group's price-to-sales (or "P/S") ratio of 1.9x right now seems quite "middle-of-the-road" compared to the Wireless Telecom industry in Japan, where the median P/S ratio is around 1.8x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

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See our latest analysis for SoftBank Group

What Does SoftBank Group's Recent Performance Look Like?

Recent revenue growth for SoftBank Group has been in line with the industry. It seems that many are expecting the mediocre revenue performance to persist, which has held the P/S ratio back. If this is the case, then at least existing shareholders won't be losing sleep over the current share price.

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

How Is SoftBank Group's Revenue Growth Trending?

The only time you'd be comfortable seeing a P/S like SoftBank Group's is when the company's growth is tracking the industry closely.

Retrospectively, the last year delivered a decent 7.2% gain to the company's revenues. Revenue has also lifted 16% in aggregate from three years ago, partly thanks to the last 12 months of growth. So we can start by confirming that the company has actually done a good job of growing revenue over that time.

Turning to the outlook, the next three years should generate growth of 5.6% each year as estimated by the eleven analysts watching the company. With the industry predicted to deliver 6.4% growth per annum, the company is positioned for a comparable revenue result.

In light of this, it's understandable that SoftBank Group'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.

The Key Takeaway

SoftBank Group appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry 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.

Our look at SoftBank Group's revenue growth estimates show that its P/S is about what we expect, as both metrics follow closely with the industry averages. At this stage investors feel the potential for an improvement or deterioration in revenue isn't great enough to push P/S in a higher or lower direction. Unless these conditions change, they will continue to support the share price at these levels.

Plus, you should also learn about these 4 warning signs we've spotted with SoftBank Group (including 2 which make us uncomfortable).

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.