Not Many Are Piling Into Hexagon Purus ASA (OB:HPUR) Stock Yet As It Plummets 52%

Unfortunately for some shareholders, the Hexagon Purus ASA (OB:HPUR) share price has dived 52% in the last thirty days, prolonging recent pain. For any long-term shareholders, the last month ends a year to forget by locking in a 67% share price decline.

In spite of the heavy fall in price, you could still be forgiven for feeling indifferent about Hexagon Purus' P/S ratio of 0.6x, since the median price-to-sales (or "P/S") ratio for the Machinery industry in Norway is also close to 1x. 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.

See our latest analysis for Hexagon Purus

How Has Hexagon Purus Performed Recently?

With revenue growth that's superior to most other companies of late, Hexagon Purus has been doing relatively well. It might be that many expect the strong revenue performance to wane, which has kept the P/S ratio from rising. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

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

Is There Some Revenue Growth Forecasted For Hexagon Purus?

Hexagon Purus' P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.

If we review the last year of revenue growth, the company posted a terrific increase of 39%. Spectacularly, three year revenue growth has ballooned by several orders of magnitude, thanks in part to the last 12 months of revenue growth. Accordingly, shareholders would have been over the moon with those medium-term rates of revenue growth.

Turning to the outlook, the next three years should generate growth of 40% each year as estimated by the five analysts watching the company. With the industry only predicted to deliver 8.0% each year, the company is positioned for a stronger revenue result.

With this information, we find it interesting that Hexagon Purus is trading at a fairly similar P/S compared to the industry. It may be that most investors aren't convinced the company can achieve future growth expectations.

What Does Hexagon Purus' P/S Mean For Investors?

With its share price dropping off a cliff, the P/S for Hexagon Purus looks to be in line with the rest of the Machinery industry. 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.

We've established that Hexagon Purus currently trades on a lower than expected P/S since its forecasted revenue growth is higher than the wider industry. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. It appears some are indeed anticipating revenue instability, because these conditions should normally provide a boost to the share price.

You need to take note of risks, for example - Hexagon Purus has 3 warning signs (and 2 which are a bit unpleasant) we think you should know about.

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.