Cyfrowe Centrum Serwisowe Spólka Akcyjna (WSE:CCS) Looks Inexpensive After Falling 27% But Perhaps Not Attractive Enough

The Cyfrowe Centrum Serwisowe Spólka Akcyjna (WSE:CCS) share price has fared very poorly over the last month, falling by a substantial 27%. For any long-term shareholders, the last month ends a year to forget by locking in a 54% share price decline.

After such a large drop in price, it would be understandable if you think Cyfrowe Centrum Serwisowe Spólka Akcyjna is a stock with good investment prospects with a price-to-sales ratios (or "P/S") of 0.2x, considering almost half the companies in Poland's Specialty Retail industry have P/S ratios above 0.7x. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

Check out our latest analysis for Cyfrowe Centrum Serwisowe Spólka Akcyjna

What Does Cyfrowe Centrum Serwisowe Spólka Akcyjna's P/S Mean For Shareholders?

For example, consider that Cyfrowe Centrum Serwisowe Spólka Akcyjna's financial performance has been poor lately as its revenue has been in decline. It might be that many expect the disappointing revenue performance to continue or accelerate, which has repressed the P/S. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Cyfrowe Centrum Serwisowe Spólka Akcyjna's earnings, revenue and cash flow.

Is There Any Revenue Growth Forecasted For Cyfrowe Centrum Serwisowe Spólka Akcyjna?

The only time you'd be truly comfortable seeing a P/S as low as Cyfrowe Centrum Serwisowe Spólka Akcyjna's is when the company's growth is on track to lag the industry.

Retrospectively, the last year delivered a frustrating 37% decrease to the company's top line. As a result, revenue from three years ago have also fallen 25% overall. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

Comparing that to the industry, which is predicted to deliver 6.1% growth in the next 12 months, the company's downward momentum based on recent medium-term revenue results is a sobering picture.

With this information, we are not surprised that Cyfrowe Centrum Serwisowe Spólka Akcyjna is trading at a P/S lower than the industry. However, we think shrinking revenues are unlikely to lead to a stable P/S over the longer term, which could set up shareholders for future disappointment. There's potential for the P/S to fall to even lower levels if the company doesn't improve its top-line growth.

The Key Takeaway

The southerly movements of Cyfrowe Centrum Serwisowe Spólka Akcyjna's shares means its P/S is now sitting at a pretty low level. 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.

Our examination of Cyfrowe Centrum Serwisowe Spólka Akcyjna confirms that the company's shrinking revenue over the past medium-term is a key factor in its low price-to-sales ratio, given the industry is projected to grow. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises either. Unless the recent medium-term conditions improve, they will continue to form a barrier for the share price around these levels.

Don't forget that there may be other risks. For instance, we've identified 3 warning signs for Cyfrowe Centrum Serwisowe Spólka Akcyjna (2 can't be ignored) you should be aware of.

If these risks are making you reconsider your opinion on Cyfrowe Centrum Serwisowe Spólka Akcyjna, 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.