Kolmar Korea Co., Ltd.'s (KRX:161890) Popularity With Investors Is Clear

There wouldn't be many who think Kolmar Korea Co., Ltd.'s (KRX:161890) price-to-sales (or "P/S") ratio of 0.7x is worth a mention when the median P/S for the Personal Products industry in Korea is similar at about 0.9x. 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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Check out our latest analysis for Kolmar Korea

How Kolmar Korea Has Been Performing

Recent revenue growth for Kolmar Korea has been in line with the industry. Perhaps the market is expecting future revenue performance to show no drastic signs of changing, justifying the P/S being at current levels. 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.

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

Is There Some Revenue Growth Forecasted For Kolmar Korea?

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

If we review the last year of revenue growth, the company posted a worthy increase of 14%. The latest three year period has also seen an excellent 55% overall rise in revenue, aided somewhat by its short-term performance. So we can start by confirming that the company has done a great job of growing revenues over that time.

Turning to the outlook, the next three years should generate growth of 9.4% each year as estimated by the analysts watching the company. That's shaping up to be similar to the 9.9% per year growth forecast for the broader industry.

With this information, we can see why Kolmar Korea is trading at a fairly similar P/S to the industry. It seems most investors are expecting to see average future growth and are only willing to pay a moderate amount for the stock.

What Does Kolmar Korea's P/S Mean For Investors?

We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

A Kolmar Korea's P/S seems about right to us given the knowledge that analysts are forecasting a revenue outlook that is similar to the Personal Products 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.

Before you settle on your opinion, we've discovered 2 warning signs for Kolmar Korea (1 is a bit concerning!) that you should be aware of.

If these risks are making you reconsider your opinion on Kolmar Korea, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.