There's Reason For Concern Over Tihama for Advertising, Public Relations and Marketing Company's (TADAWUL:4070) Massive 65% Price Jump

The Tihama for Advertising, Public Relations and Marketing Company (TADAWUL:4070) share price has done very well over the last month, posting an excellent gain of 65%. The last 30 days bring the annual gain to a very sharp 79%.

Following the firm bounce in price, given around half the companies in Saudi Arabia's Media industry have price-to-sales ratios (or "P/S") below 2.7x, you may consider Tihama for Advertising Public Relations and Marketing as a stock to avoid entirely with its 16.8x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so lofty.

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Check out our latest analysis for Tihama for Advertising Public Relations and Marketing

What Does Tihama for Advertising Public Relations and Marketing's Recent Performance Look Like?

As an illustration, revenue has deteriorated at Tihama for Advertising Public Relations and Marketing over the last year, which is not ideal at all. It might be that many expect the company to still outplay most other companies over the coming period, which has kept the P/S from collapsing. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

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 Tihama for Advertising Public Relations and Marketing's earnings, revenue and cash flow.

Is There Enough Revenue Growth Forecasted For Tihama for Advertising Public Relations and Marketing?

Tihama for Advertising Public Relations and Marketing's P/S ratio would be typical for a company that's expected to deliver very strong growth, and importantly, perform much better than 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 4.1%. The last three years don't look nice either as the company has shrunk revenue by 18% in aggregate. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

Weighing that medium-term revenue trajectory against the broader industry's one-year forecast for expansion of 13% shows it's an unpleasant look.

With this information, we find it concerning that Tihama for Advertising Public Relations and Marketing is trading at a P/S higher than the industry. It seems most investors are ignoring the recent poor growth rate and are hoping for a turnaround in the company's business prospects. Only the boldest would assume these prices are sustainable as a continuation of recent revenue trends is likely to weigh heavily on the share price eventually.

What Does Tihama for Advertising Public Relations and Marketing's P/S Mean For Investors?

Tihama for Advertising Public Relations and Marketing's P/S has grown nicely over the last month thanks to a handy boost in the share price. 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.

Our examination of Tihama for Advertising Public Relations and Marketing revealed its shrinking revenue over the medium-term isn't resulting in a P/S as low as we expected, given the industry is set to grow. When we see revenue heading backwards and underperforming the industry forecasts, we feel the possibility of the share price declining is very real, bringing the P/S back into the realm of reasonability. Unless the the circumstances surrounding the recent medium-term improve, it wouldn't be wrong to expect a a difficult period ahead for the company's shareholders.

You always need to take note of risks, for example - Tihama for Advertising Public Relations and Marketing has 1 warning sign we think you should be aware of.

If these risks are making you reconsider your opinion on Tihama for Advertising Public Relations and Marketing, 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.