Clavister Holding AB (publ.) (STO:CLAV) Stocks Pounded By 29% But Not Lagging Industry On Growth Or Pricing

Unfortunately for some shareholders, the Clavister Holding AB (publ.) (STO:CLAV) share price has dived 29% in the last thirty days, prolonging recent pain. Still, a bad month hasn't completely ruined the past year with the stock gaining 41%, which is great even in a bull market.

In spite of the heavy fall in price, given close to half the companies operating in Sweden's Software industry have price-to-sales ratios (or "P/S") below 2.6x, you may still consider Clavister Holding AB (publ.) as a stock to potentially avoid with its 4.2x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the elevated P/S.

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Check out our latest analysis for Clavister Holding AB (publ.)

How Clavister Holding AB (publ.) Has Been Performing

Recent times have been advantageous for Clavister Holding AB (publ.) as its revenues have been rising faster than most other companies. It seems that many are expecting the strong revenue performance to persist, which has raised the P/S. However, if this isn't the case, investors might get caught out paying too much for the stock.

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

Do Revenue Forecasts Match The High P/S Ratio?

Clavister Holding AB (publ.)'s P/S ratio would be typical for a company that's expected to deliver solid growth, and importantly, perform better than the industry.

Retrospectively, the last year delivered an exceptional 21% gain to the company's top line. The strong recent performance means it was also able to grow revenue by 53% in total over the last three years. So we can start by confirming that the company has done a great job of growing revenue over that time.

Shifting to the future, estimates from the one analyst covering the company suggest revenue should grow by 17% over the next year. With the industry only predicted to deliver 2.8%, the company is positioned for a stronger revenue result.

With this information, we can see why Clavister Holding AB (publ.) is trading at such a high P/S compared to the industry. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Bottom Line On Clavister Holding AB (publ.)'s P/S

There's still some elevation in Clavister Holding AB (publ.)'s P/S, even if the same can't be said for its share price recently. 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.

As we suspected, our examination of Clavister Holding AB (publ.)'s analyst forecasts revealed that its superior revenue outlook is contributing to its high P/S. At this stage investors feel the potential for a deterioration in revenues is quite remote, justifying the elevated P/S ratio. It's hard to see the share price falling strongly in the near future under these circumstances.

It's always necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Clavister Holding AB (publ.) (at least 1 which is a bit concerning), and understanding them should be part of your investment process.

If you're unsure about the strength of Clavister Holding AB (publ.)'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.