Fastned B.V. (AMS:FAST) Stocks Shoot Up 26% But Its P/S Still Looks Reasonable

Fastned B.V. (AMS:FAST) shares have had a really impressive month, gaining 26% after a shaky period beforehand. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 30% in the last twelve months.

Following the firm bounce in price, you could be forgiven for thinking Fastned B.V is a stock to steer clear of with a price-to-sales ratios (or "P/S") of 5.3x, considering almost half the companies in the Netherlands' Specialty Retail industry have P/S ratios below 0.4x. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.

See our latest analysis for Fastned B.V

How Fastned B.V Has Been Performing

Fastned B.V certainly has been doing a good job lately as it's been growing revenue more than most other companies. It seems the market expects this form will continue into the future, hence the elevated P/S ratio. However, if this isn't the case, investors might get caught out paying too much for the stock.

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

How Is Fastned B.V's Revenue Growth Trending?

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

Retrospectively, the last year delivered an exceptional 46% gain to the company's top line. Spectacularly, three year revenue growth has ballooned by several orders of magnitude, thanks in part to the last 12 months of revenue growth. So we can start by confirming that the company has done a tremendous job of growing revenue over that time.

Turning to the outlook, the next three years should generate growth of 53% per annum as estimated by the nine analysts watching the company. That's shaping up to be materially higher than the 7.4% per year growth forecast for the broader industry.

With this information, we can see why Fastned B.V 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 Fastned B.V's P/S?

The strong share price surge has lead to Fastned B.V's P/S soaring as well. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

Our look into Fastned B.V shows that its P/S ratio remains high on the merit of its strong future revenues. At this stage investors feel the potential for a deterioration in revenues is quite remote, justifying the elevated P/S ratio. It's hard to see the share price falling strongly in the near future under these circumstances.

And what about other risks? Every company has them, and we've spotted 1 warning sign for Fastned B.V you should know about.

If you're unsure about the strength of Fastned B.V'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.