Revenues Tell The Story For Cadeler A/S (OB:CADLR)

When close to half the companies in the Construction industry in Norway have price-to-sales ratios (or "P/S") below 0.6x, you may consider Cadeler A/S (OB:CADLR) as a stock to avoid entirely with its 9x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so lofty.

View our latest analysis for Cadeler

How Has Cadeler Performed Recently?

Recent times have been advantageous for Cadeler as its revenues have been rising faster than most other companies. It seems that many are expecting the strong revenue performance to persist, which has raised the P/S. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

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

Is There Enough Revenue Growth Forecasted For Cadeler?

In order to justify its P/S ratio, Cadeler would need to produce outstanding growth that's well in excess of the industry.

Taking a look back first, we see that the company grew revenue by an impressive 47% last year. The latest three year period has also seen an excellent 248% overall rise in revenue, aided by its short-term performance. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Shifting to the future, estimates from the eight analysts covering the company suggest revenue should grow by 82% per annum over the next three years. With the industry only predicted to deliver 58% per annum, the company is positioned for a stronger revenue result.

With this in mind, it's not hard to understand why Cadeler's P/S is high relative to its industry peers. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

The Bottom Line On Cadeler's P/S

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.

Our look into Cadeler shows that its P/S ratio remains high on the merit of its strong future revenues. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. Unless these conditions change, they will continue to provide strong support to the share price.

Before you settle on your opinion, we've discovered 3 warning signs for Cadeler (2 don't sit too well with us!) that you should be aware of.

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