ALPEK, S.A.B. de C.V. (BMV:ALPEKA) Shares Slammed 27% But Getting In Cheap Might Be Difficult Regardless

Unfortunately for some shareholders, the ALPEK, S.A.B. de C.V. (BMV:ALPEKA) share price has dived 27% in the last thirty days, prolonging recent pain. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 27% in that time.

In spite of the heavy fall in price, you could still be forgiven for feeling indifferent about ALPEK. de's P/S ratio of 0.1x, since the median price-to-sales (or "P/S") ratio for the Chemicals industry in Mexico is also close to 0.5x. 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 ALPEK. de

What Does ALPEK. de's P/S Mean For Shareholders?

ALPEK. de hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. It might be that many expect the dour revenue performance to strengthen positively, which has kept the P/S from falling. However, if this isn't the case, investors might get caught out paying too much for the stock.

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

Is There Some Revenue Growth Forecasted For ALPEK. de?

In order to justify its P/S ratio, ALPEK. de would need to produce growth that's similar to the industry.

Taking a look back first, we see that there was hardly any revenue growth to speak of for the company over the past year. Whilst it's an improvement, it wasn't enough to get the company out of the hole it was in, with revenue down 12% overall from three years ago. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

Looking ahead now, revenue is anticipated to climb by 6.1% each year during the coming three years according to the eleven analysts following the company. That's shaping up to be similar to the 5.7% per year growth forecast for the broader industry.

With this information, we can see why ALPEK. de 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 ALPEK. de's P/S Mean For Investors?

ALPEK. de's plummeting stock price has brought its P/S back to a similar region as the rest of the industry. 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.

A ALPEK. de's P/S seems about right to us given the knowledge that analysts are forecasting a revenue outlook that is similar to the Chemicals 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. All things considered, if the P/S and revenue estimates contain no major shocks, then it's hard to see the share price moving strongly in either direction in the near future.

Before you take the next step, you should know about the 3 warning signs for ALPEK. de that we have uncovered.

If these risks are making you reconsider your opinion on ALPEK. de, 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.