The Market Lifts Humble Group AB (publ) (STO:HUMBLE) Shares 26% But It Can Do More

Despite an already strong run, Humble Group AB (publ) (STO:HUMBLE) shares have been powering on, with a gain of 26% in the last thirty days. The last 30 days bring the annual gain to a very sharp 39%.

Although its price has surged higher, you could still be forgiven for feeling indifferent about Humble Group's P/S ratio of 0.7x, since the median price-to-sales (or "P/S") ratio for the Personal Products industry in Sweden is about the same. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

View our latest analysis for Humble Group

How Has Humble Group Performed Recently?

There hasn't been much to differentiate Humble Group's and the industry's revenue growth lately. Perhaps the market is expecting future revenue performance to show no drastic signs of changing, justifying the P/S being at current levels. If this is the case, then at least existing shareholders won't be losing sleep over the current share price.

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

Is There Some Revenue Growth Forecasted For Humble Group?

There's an inherent assumption that a company should be matching the industry for P/S ratios like Humble Group's to be considered reasonable.

Retrospectively, the last year delivered an exceptional 18% gain to the company's top line. Spectacularly, three year revenue growth has ballooned by several orders of magnitude, thanks in part to the last 12 months of revenue growth. Accordingly, shareholders would have been over the moon with those medium-term rates of revenue growth.

Turning to the outlook, the next year should generate growth of 10% as estimated by the three analysts watching the company. With the industry only predicted to deliver 5.0%, the company is positioned for a stronger revenue result.

With this in consideration, we find it intriguing that Humble Group's P/S is closely matching its industry peers. It may be that most investors aren't convinced the company can achieve future growth expectations.

What We Can Learn From Humble Group's P/S?

Its shares have lifted substantially and now Humble Group's P/S is back within range of the industry median. 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.

Looking at Humble Group'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. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.

A lot of potential risks can sit within a company's balance sheet. You can assess many of the main risks through our free balance sheet analysis for Humble Group with six simple checks.

If you're unsure about the strength of Humble Group'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.