SoftBank Group Corp. (TSE:9984) Not Lagging Industry On Growth Or Pricing

There wouldn't be many who think SoftBank Group Corp.'s (TSE:9984) price-to-sales (or "P/S") ratio of 1.9x is worth a mention when the median P/S for the Wireless Telecom industry in Japan is very similar. 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.

See our latest analysis for SoftBank Group

What Does SoftBank Group's P/S Mean For Shareholders?

Recent revenue growth for SoftBank Group has been in line with the industry. The P/S ratio is probably moderate because investors think this modest revenue performance will continue. If you like the company, you'd be hoping this can at least be maintained so that you could pick up some stock while it's not quite in favour.

Want the full picture on analyst estimates for the company? Then our free report on SoftBank Group will help you uncover what's on the horizon.

Is There Some Revenue Growth Forecasted For SoftBank Group?

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

If we review the last year of revenue growth, the company posted a worthy increase of 5.8%. The solid recent performance means it was also able to grow revenue by 17% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been respectable for the company.

Looking ahead now, revenue is anticipated to climb by 4.7% per annum during the coming three years according to the analysts following the company. That's shaping up to be similar to the 6.2% each year growth forecast for the broader industry.

With this in mind, it makes sense that SoftBank Group's P/S is closely matching its industry peers. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

What We Can Learn From SoftBank Group's P/S?

Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

We've seen that SoftBank Group maintains an adequate P/S seeing as its revenue growth figures match the rest of the industry. 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. If all things remain constant, the possibility of a drastic share price movement remains fairly remote.

Don't forget that there may be other risks. For instance, we've identified 4 warning signs for SoftBank Group (2 are a bit concerning) you should be aware of.

If you're unsure about the strength of SoftBank Group'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.