After Leaping 69% Metacon AB (publ) (STO:META) Shares Are Not Flying Under The Radar

Metacon AB (publ) (STO:META) shares have continued their recent momentum with a 69% gain in the last month alone. The last month tops off a massive increase of 125% in the last year.

Following the firm bounce in price, when almost half of the companies in Sweden's Electrical industry have price-to-sales ratios (or "P/S") below 1.7x, you may consider Metacon as a stock not worth researching with its 5.8x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.

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See our latest analysis for Metacon

What Does Metacon's Recent Performance Look Like?

Recent times have been advantageous for Metacon as its revenues have been rising faster than most other companies. It seems the market expects this form will continue into the future, hence the elevated P/S ratio. If not, then existing shareholders might be a little nervous about the viability of the share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Metacon.

Is There Enough Revenue Growth Forecasted For Metacon?

The only time you'd be truly comfortable seeing a P/S as steep as Metacon's is when the company's growth is on track to outshine the industry decidedly.

Retrospectively, the last year delivered an exceptional 226% gain to the company's top line. Pleasingly, revenue has also lifted 203% in aggregate from three years ago, thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing revenue over that time.

Shifting to the future, estimates from the one analyst covering the company suggest revenue should grow by 96% per annum over the next three years. Meanwhile, the rest of the industry is forecast to only expand by 8.2% per annum, which is noticeably less attractive.

With this information, we can see why Metacon is trading at such a high P/S compared to the industry. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Bottom Line On Metacon's P/S

Shares in Metacon have seen a strong upwards swing lately, which has really helped boost its P/S figure. 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 look into Metacon shows that its P/S ratio remains high on the merit of its strong future revenues. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. It's hard to see the share price falling strongly in the near future under these circumstances.

Having said that, be aware Metacon is showing 4 warning signs in our investment analysis, and 3 of those are potentially serious.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.