Investors Give Ebusco Holding N.V. (AMS:EBUS) Shares A 42% Hiding

The Ebusco Holding N.V. (AMS:EBUS) share price has fared very poorly over the last month, falling by a substantial 42%. For any long-term shareholders, the last month ends a year to forget by locking in a 85% share price decline.

In spite of the heavy fall in price, you could still be forgiven for feeling indifferent about Ebusco Holding's P/S ratio of 0.9x, since the median price-to-sales (or "P/S") ratio for the Machinery industry in the Netherlands is about the same. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

View our latest analysis for Ebusco Holding

How Has Ebusco Holding Performed Recently?

While the industry has experienced revenue growth lately, Ebusco Holding's revenue has gone into reverse gear, which is not great. Perhaps the market is expecting its poor revenue performance to improve, keeping the P/S from dropping. However, if this isn't the case, investors might get caught out paying too much for the stock.

Keen to find out how analysts think Ebusco Holding'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 Ebusco Holding?

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

Retrospectively, the last year delivered a frustrating 8.2% decrease to the company's top line. At least revenue has managed not to go completely backwards from three years ago in aggregate, thanks to the earlier period of growth. So it appears to us that the company has had a mixed result in terms of growing revenue over that time.

Turning to the outlook, the next three years should generate growth of 70% per annum as estimated by the four analysts watching the company. With the industry only predicted to deliver 5.9% each year, the company is positioned for a stronger revenue result.

In light of this, it's curious that Ebusco Holding's P/S sits in line with the majority of other companies. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.

What We Can Learn From Ebusco Holding's P/S?

Following Ebusco Holding's share price tumble, its P/S is just clinging on to the industry median P/S. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

Looking at Ebusco Holding's analyst forecasts revealed that its superior revenue outlook isn't giving the boost to its P/S that we would've expected. There could be some risks that the market is pricing in, which is preventing the P/S ratio from matching the positive outlook. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.

We don't want to rain on the parade too much, but we did also find 4 warning signs for Ebusco Holding (1 is significant!) that you need to be mindful of.

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