Takween Advanced Industries (TADAWUL:1201) Stocks Shoot Up 26% But Its P/S Still Looks Reasonable

Takween Advanced Industries (TADAWUL:1201) shares have had a really impressive month, gaining 26% after a shaky period beforehand. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 37% over that time.

Even after such a large jump in price, it's still not a stretch to say that Takween Advanced Industries' price-to-sales (or "P/S") ratio of 0.9x right now seems quite "middle-of-the-road" compared to the Packaging industry in Saudi Arabia, where the median P/S ratio is around 1.3x. 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.

Check out our latest analysis for Takween Advanced Industries

What Does Takween Advanced Industries' Recent Performance Look Like?

There hasn't been much to differentiate Takween Advanced Industries' and the industry's revenue growth lately. It seems that many are expecting the mediocre revenue performance to persist, which has held the P/S ratio back. Those who are bullish on Takween Advanced Industries will be hoping that revenue performance can pick up, so that they can pick up the stock at a slightly lower valuation.

Keen to find out how analysts think Takween Advanced Industries' future stacks up against the industry? In that case, our free report is a great place to start.

How Is Takween Advanced Industries' Revenue Growth Trending?

Takween Advanced Industries' 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 25%. Revenue has also lifted 13% in aggregate from three years ago, mostly thanks to the last 12 months of growth. Therefore, it's fair to say the revenue growth recently has been respectable for the company.

Looking ahead now, revenue is anticipated to climb by 5.3% per year during the coming three years according to the lone analyst following the company. That's shaping up to be similar to the 6.9% each year growth forecast for the broader industry.

With this in mind, it makes sense that Takween Advanced Industries' P/S is closely matching its industry peers. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

What We Can Learn From Takween Advanced Industries' P/S?

Its shares have lifted substantially and now Takween Advanced Industries' P/S is back within range of the industry median. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

A Takween Advanced Industries' P/S seems about right to us given the knowledge that analysts are forecasting a revenue outlook that is similar to the Packaging industry. Right now shareholders are comfortable with the P/S as they are quite confident future revenue won't throw up any surprises. Unless these conditions change, they will continue to support the share price at these levels.

And what about other risks? Every company has them, and we've spotted 1 warning sign for Takween Advanced Industries you should know about.

Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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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.