Slammed 38% Integrum AB (publ) (STO:INTEG B) Screens Well Here But There Might Be A Catch

Integrum AB (publ) (STO:INTEG B) shareholders that were waiting for something to happen have been dealt a blow with a 38% share price drop in the last month. Looking at the bigger picture, even after this poor month the stock is up 64% in the last year.

Although its price has dipped substantially, there still wouldn't be many who think Integrum's price-to-sales (or "P/S") ratio of 5.6x is worth a mention when the median P/S in Sweden's Medical Equipment industry is similar at about 5.2x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

Check out our latest analysis for Integrum

What Does Integrum's Recent Performance Look Like?

Recent times have been advantageous for Integrum as its revenues have been rising faster than most other companies. It might be that many expect the strong revenue performance to wane, which has kept the P/S ratio from rising. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.

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

How Is Integrum's Revenue Growth Trending?

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

Retrospectively, the last year delivered an exceptional 42% gain to the company's top line. The strong recent performance means it was also able to grow revenue by 152% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Shifting to the future, estimates from the three analysts covering the company suggest revenue should grow by 36% each year over the next three years. That's shaping up to be materially higher than the 15% each year growth forecast for the broader industry.

In light of this, it's curious that Integrum's P/S sits in line with the majority of other companies. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.

What Does Integrum's P/S Mean For Investors?

Following Integrum's share price tumble, its P/S is just clinging on to the industry median P/S. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

Looking at Integrum's analyst forecasts revealed that its superior revenue outlook isn't giving the boost to its P/S that we would've expected. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. This uncertainty seems to be reflected in the share price which, while stable, could be higher given the revenue forecasts.

Before you settle on your opinion, we've discovered 4 warning signs for Integrum (2 are a bit unpleasant!) that you should be aware of.

If you're unsure about the strength of Integrum'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.