Angler Gaming plc's (NGM:ANGL) P/S Still Appears To Be Reasonable

With a median price-to-sales (or "P/S") ratio of close to 0.7x in the Hospitality industry in Sweden, you could be forgiven for feeling indifferent about Angler Gaming plc's (NGM:ANGL) P/S ratio, which comes in at about the same. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

Check out our latest analysis for Angler Gaming

What Does Angler Gaming's Recent Performance Look Like?

Angler Gaming could be doing better as it's been growing revenue less than most other companies lately. Perhaps the market is expecting future revenue performance to lift, which has kept the P/S from declining. However, if this isn't the case, investors might get caught out paying too much for the stock.

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

What Are Revenue Growth Metrics Telling Us About The P/S?

In order to justify its P/S ratio, Angler Gaming would need to produce growth that's similar to the industry.

Retrospectively, the last year delivered a decent 8.2% gain to the company's revenues. Still, lamentably revenue has fallen 11% in aggregate from three years ago, which is disappointing. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

Turning to the outlook, the next three years should generate growth of 7.6% per year as estimated by the dual analysts watching the company. Meanwhile, the rest of the industry is forecast to expand by 7.6% per year, which is not materially different.

In light of this, it's understandable that Angler Gaming's P/S sits in line with the majority of other companies. It seems most investors are expecting to see average future growth and are only willing to pay a moderate amount for the stock.

What We Can Learn From Angler Gaming'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.

A Angler Gaming's P/S seems about right to us given the knowledge that analysts are forecasting a revenue outlook that is similar to the Hospitality industry. At this stage investors feel the potential for an improvement or deterioration in revenue isn't great enough to push P/S in a higher or lower direction. If all things remain constant, the possibility of a drastic share price movement remains fairly remote.

Before you take the next step, you should know about the 1 warning sign for Angler Gaming that we have uncovered.

If you're unsure about the strength of Angler Gaming'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.