Positive Sentiment Still Eludes Walaa Cooperative Insurance Company (TADAWUL:8060) Following 29% Share Price Slump

To the annoyance of some shareholders, Walaa Cooperative Insurance Company (TADAWUL:8060) shares are down a considerable 29% in the last month, which continues a horrid run for the company. Indeed, the recent drop has reduced its annual gain to a relatively sedate 6.6% over the last twelve months.

In spite of the heavy fall in price, there still wouldn't be many who think Walaa Cooperative Insurance's price-to-sales (or "P/S") ratio of 0.9x is worth a mention when the median P/S in Saudi Arabia's Insurance industry is similar at about 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.

View our latest analysis for Walaa Cooperative Insurance

How Walaa Cooperative Insurance Has Been Performing

Recent times haven't been great for Walaa Cooperative Insurance as its revenue has been rising slower than most other companies. Perhaps the market is expecting future revenue performance to lift, which has kept the P/S from declining. 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 Walaa Cooperative Insurance will help you uncover what's on the horizon.

Is There Some Revenue Growth Forecasted For Walaa Cooperative Insurance?

The only time you'd be comfortable seeing a P/S like Walaa Cooperative Insurance's is when the company's growth is tracking the industry closely.

Retrospectively, the last year delivered an exceptional 21% gain to the company's top line. The latest three year period has also seen an excellent 119% 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.

Looking ahead now, revenue is anticipated to climb by 95% during the coming year according to the lone analyst following the company. That's shaping up to be materially higher than the 17% growth forecast for the broader industry.

With this in consideration, we find it intriguing that Walaa Cooperative Insurance's P/S is closely matching its industry peers. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.

The Final Word

Following Walaa Cooperative Insurance's share price tumble, its P/S is just clinging on to the industry median P/S. 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.

Looking at Walaa Cooperative Insurance's analyst forecasts revealed that its superior revenue outlook isn't giving the boost to its P/S that we would've expected. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.

Plus, you should also learn about this 1 warning sign we've spotted with Walaa Cooperative Insurance.

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.

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