Even With A 32% Surge, Cautious Investors Are Not Rewarding Cognor Holding S.A.'s (WSE:COG) Performance Completely

Cognor Holding S.A. (WSE:COG) shareholders would be excited to see that the share price has had a great month, posting a 32% gain and recovering from prior weakness. Unfortunately, despite the strong performance over the last month, the full year gain of 4.1% isn't as attractive.

In spite of the firm bounce in price, there still wouldn't be many who think Cognor Holding's price-to-sales (or "P/S") ratio of 0.6x is worth a mention when the median P/S in Poland's Metals and Mining industry is similar at about 0.3x. 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 Cognor Holding

How Cognor Holding Has Been Performing

With revenue that's retreating more than the industry's average of late, Cognor Holding has been very sluggish. It might be that many expect the dismal revenue performance to revert back to industry averages soon, which has kept the P/S from falling. If you still like the company, you'd want its revenue trajectory to turn around before making any decisions. If not, then existing shareholders may 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 Cognor Holding will help you uncover what's on the horizon.

Is There Some Revenue Growth Forecasted For Cognor Holding?

In order to justify its P/S ratio, Cognor Holding would need to produce growth that's similar to the industry.

Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 25%. The last three years don't look nice either as the company has shrunk revenue by 4.9% in aggregate. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

Looking ahead now, revenue is anticipated to climb by 25% during the coming year according to the one analyst following the company. Meanwhile, the rest of the industry is forecast to only expand by 7.9%, which is noticeably less attractive.

In light of this, it's curious that Cognor Holding's P/S sits in line with the majority of other companies. It may be that most investors aren't convinced the company can achieve future growth expectations.

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

Cognor Holding appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

We've established that Cognor Holding currently trades on a lower than expected P/S since its forecasted revenue growth is higher than the wider industry. When we see a strong revenue outlook, with growth outpacing the industry, we can only assume potential uncertainty around these figures are what might be placing slight pressure on the P/S ratio. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.

You always need to take note of risks, for example - Cognor Holding has 1 warning sign we think you should be aware of.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.