Investors Aren't Buying Mobile Telecommunications Company Saudi Arabia's (TADAWUL:7030) Revenues

Mobile Telecommunications Company Saudi Arabia's (TADAWUL:7030) price-to-sales (or "P/S") ratio of 0.9x may look like a pretty appealing investment opportunity when you consider close to half the companies in the Wireless Telecom industry in Saudi Arabia have P/S ratios greater than 1.5x. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

View our latest analysis for Mobile Telecommunications Company Saudi Arabia

How Has Mobile Telecommunications Company Saudi Arabia Performed Recently?

Recent revenue growth for Mobile Telecommunications Company Saudi Arabia has been in line with the industry. Perhaps the market is expecting future revenue performance to dive, which has kept the P/S suppressed. If not, then existing shareholders have reason to be optimistic about the future direction of the share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Mobile Telecommunications Company Saudi Arabia.

How Is Mobile Telecommunications Company Saudi Arabia's Revenue Growth Trending?

In order to justify its P/S ratio, Mobile Telecommunications Company Saudi Arabia would need to produce sluggish growth that's trailing the industry.

If we review the last year of revenue growth, the company posted a worthy increase of 4.8%. Revenue has also lifted 30% in aggregate from three years ago, partly thanks to the last 12 months of growth. Therefore, it's fair to say the revenue growth recently has been respectable for the company.

Shifting to the future, estimates from the nine analysts covering the company suggest revenue should grow by 3.2% per annum over the next three years. That's shaping up to be materially lower than the 5.7% per annum growth forecast for the broader industry.

With this information, we can see why Mobile Telecommunications Company Saudi Arabia is trading at a P/S lower than the industry. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

The Bottom Line On Mobile Telecommunications Company Saudi Arabia's P/S

While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

As we suspected, our examination of Mobile Telecommunications Company Saudi Arabia's analyst forecasts revealed that its inferior revenue outlook is contributing to its low P/S. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. It's hard to see the share price rising strongly in the near future under these circumstances.

Plus, you should also learn about these 4 warning signs we've spotted with Mobile Telecommunications Company Saudi Arabia (including 1 which makes us a bit uncomfortable).

If you're unsure about the strength of Mobile Telecommunications Company Saudi Arabia's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.