Envipco Holding N.V. (AMS:ENVI) Looks Just Right With A 29% Price Jump

Envipco Holding N.V. (AMS:ENVI) shareholders are no doubt pleased to see that the share price has bounced 29% in the last month, although it is still struggling to make up recently lost ground. But the gains over the last month weren't enough to make shareholders whole, as the share price is still down 2.9% in the last twelve months.

Following the firm bounce in price, when almost half of the companies in the Netherlands' Machinery industry have price-to-sales ratios (or "P/S") below 0.9x, you may consider Envipco Holding as a stock not worth researching with its 3.2x P/S ratio. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.

Our free stock report includes 1 warning sign investors should be aware of before investing in Envipco Holding. Read for free now.

See our latest analysis for Envipco Holding

How Has Envipco Holding Performed Recently?

Recent times have been advantageous for Envipco Holding as its revenues have been rising faster than most other companies. It seems the market expects this form will continue into the future, hence the elevated P/S ratio. If not, then existing shareholders might be a little nervous about the viability of the share price.

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

Is There Enough Revenue Growth Forecasted For Envipco Holding?

The only time you'd be truly comfortable seeing a P/S as steep as Envipco Holding's is when the company's growth is on track to outshine the industry decidedly.

Taking a look back first, we see that the company grew revenue by an impressive 35% last year. The strong recent performance means it was also able to grow revenue by 207% in total over the last three years. So we can start by confirming that the company has done a great job of growing revenue over that time.

Looking ahead now, revenue is anticipated to climb by 40% per annum during the coming three years according to the four analysts following the company. With the industry only predicted to deliver 6.1% per year, the company is positioned for a stronger revenue result.

With this information, we can see why Envipco Holding is trading at such a high P/S compared to the industry. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

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

Shares in Envipco Holding have seen a strong upwards swing lately, which has really helped boost its P/S figure. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

Our look into Envipco Holding shows that its P/S ratio remains high on the merit of its strong future revenues. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. Unless these conditions change, they will continue to provide strong support to the share price.

Having said that, be aware Envipco Holding is showing 1 warning sign in our investment analysis, you should know about.

If you're unsure about the strength of Envipco Holding's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.