Market Might Still Lack Some Conviction On Integrum AB (publ) (STO:INTEG B) Even After 26% Share Price Boost

Integrum AB (publ) (STO:INTEG B) shareholders would be excited to see that the share price has had a great month, posting a 26% gain and recovering from prior weakness. But the last month did very little to improve the 68% share price decline over the last year.

Although its price has surged higher, Integrum may still be sending buy signals at present with its price-to-sales (or "P/S") ratio of 3.8x, considering almost half of all companies in the Medical Equipment industry in Sweden have P/S ratios greater than 5.3x and even P/S higher than 10x aren't out of the ordinary. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

Our free stock report includes 2 warning signs investors should be aware of before investing in Integrum. Read for free now.

See our latest analysis for Integrum

What Does Integrum's Recent Performance Look Like?

While the industry has experienced revenue growth lately, Integrum'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 you still like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

Want the full picture on analyst estimates for the company? Then our free report on Integrum will help you uncover what's on the horizon.

How Is Integrum's Revenue Growth Trending?

The only time you'd be truly comfortable seeing a P/S as low as Integrum's is when the company's growth is on track to lag the industry.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 3.0%. However, a few very strong years before that means that it was still able to grow revenue by an impressive 88% in total over the last three years. Although it's been a bumpy ride, it's still fair to say the revenue growth recently has been more than adequate for the company.

Looking ahead now, revenue is anticipated to climb by 36% each year during the coming three years according to the three analysts following the company. That's shaping up to be materially higher than the 12% per year growth forecast for the broader industry.

With this in consideration, we find it intriguing that Integrum's P/S sits behind most of its industry peers. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.

What We Can Learn From Integrum's P/S?

Integrum's stock price has surged recently, but its but its P/S still remains modest. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

A look at Integrum's revenues reveals that, despite glowing future growth forecasts, its P/S is much lower than we'd expect. When we see strong growth forecasts like this, we can only assume potential risks are what might be placing significant pressure on the P/S ratio. It appears the market could be anticipating revenue instability, because these conditions should normally provide a boost to the share price.

Before you settle on your opinion, we've discovered 2 warning signs for Integrum that you should be aware of.

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.