Benign Growth For Viaplay Group AB (publ) (STO:VPLAY B) Underpins Stock's 31% Plummet

Unfortunately for some shareholders, the Viaplay Group AB (publ) (STO:VPLAY B) share price has dived 31% in the last thirty days, prolonging recent pain. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 100% loss during that time.

Since its price has dipped substantially, Viaplay Group's price-to-sales (or "P/S") ratio of 0.2x might make it look like a buy right now compared to the Media industry in Sweden, where around half of the companies have P/S ratios above 0.7x and even P/S above 3x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

See our latest analysis for Viaplay Group

How Has Viaplay Group Performed Recently?

Recent times haven't been great for Viaplay Group as its revenue has been rising slower than most other companies. It seems that many are expecting the uninspiring revenue performance to persist, which has repressed the growth of the P/S ratio. If you still like the company, you'd be hoping revenue doesn't get any worse and that you could pick up some stock while it's out of favour.

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

Is There Any Revenue Growth Forecasted For Viaplay Group?

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

If we review the last year of revenue growth, the company posted a worthy increase of 11%. This was backed up an excellent period prior to see revenue up by 62% in total over the last three years. So we can start by confirming that the company has done a great job of growing revenues over that time.

Looking ahead now, revenue is anticipated to slump, contracting by 3.7% during the coming year according to the five analysts following the company. Meanwhile, the broader industry is forecast to expand by 5.1%, which paints a poor picture.

With this in consideration, we find it intriguing that Viaplay Group's P/S is closely matching its industry peers. However, shrinking revenues are unlikely to lead to a stable P/S over the longer term. Even just maintaining these prices could be difficult to achieve as the weak outlook is weighing down the shares.

What Does Viaplay Group's P/S Mean For Investors?

Viaplay Group's P/S has taken a dip along with its share price. 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.

It's clear to see that Viaplay Group maintains its low P/S on the weakness of its forecast for sliding revenue, as expected. As other companies in the industry are forecasting revenue growth, Viaplay Group's poor outlook justifies its low P/S ratio. Unless there's material change, it's hard to envision a situation where the stock price will rise drastically.

Before you settle on your opinion, we've discovered 3 warning signs for Viaplay Group that you should be aware of.

If you're unsure about the strength of Viaplay 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.