Fewer Investors Than Expected Jumping On Vo2 Cap Holding AB (publ) (STO:VO2)

You may think that with a price-to-sales (or "P/S") ratio of 0.3x Vo2 Cap Holding AB (publ) (STO:VO2) is definitely a stock worth checking out, seeing as almost half of all the Capital Markets companies in Sweden have P/S ratios greater than 3x and even P/S above 14x aren't out of the ordinary. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so limited.

See our latest analysis for Vo2 Cap Holding

What Does Vo2 Cap Holding's Recent Performance Look Like?

While the industry has experienced revenue growth lately, Vo2 Cap Holding's revenue has gone into reverse gear, which is not great. It seems that many are expecting the poor revenue performance to persist, which has repressed the P/S ratio. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

Keen to find out how analysts think Vo2 Cap Holding's future stacks up against the industry? In that case, our free report is a great place to start.

How Is Vo2 Cap Holding's Revenue Growth Trending?

There's an inherent assumption that a company should far underperform the industry for P/S ratios like Vo2 Cap Holding's to be considered reasonable.

Retrospectively, the last year delivered a frustrating 13% decrease to the company's top line. That put a dampener on the good run it was having over the longer-term as its three-year revenue growth is still a noteworthy 20% in total. Accordingly, while they would have preferred to keep the run going, shareholders would be roughly satisfied with the medium-term rates of revenue growth.

Turning to the outlook, the next year should generate growth of 12% as estimated by the only analyst watching the company. With the industry only predicted to deliver 4.0%, the company is positioned for a stronger revenue result.

In light of this, it's peculiar that Vo2 Cap Holding's P/S sits below the majority of other companies. It looks like most investors are not convinced at all that the company can achieve future growth expectations.

The Bottom Line On Vo2 Cap Holding's P/S

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 look at Vo2 Cap Holding's revenues reveals that, despite glowing future growth forecasts, its P/S is much lower than we'd expect. There could be some major risk factors that are placing downward pressure on the P/S ratio. At least price risks look to be very low, but investors seem to think future revenues could see a lot of volatility.

There are also other vital risk factors to consider and we've discovered 2 warning signs for Vo2 Cap Holding (1 is a bit concerning!) that you should be aware of before investing here.

If you're unsure about the strength of Vo2 Cap Holding'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.