Investors Holding Back On Nordic LEVEL Group AB (publ.) (STO:LEVEL)

Nordic LEVEL Group AB (publ.)'s (STO:LEVEL) price-to-sales (or "P/S") ratio of 0.2x might make it look like a buy right now compared to the Electronic industry in Sweden, where around half of the companies have P/S ratios above 1.6x and even P/S above 4x are quite common. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

See our latest analysis for Nordic LEVEL Group AB (publ.)

What Does Nordic LEVEL Group AB (publ.)'s Recent Performance Look Like?

Nordic LEVEL Group AB (publ.) certainly has been doing a good job lately as it's been growing revenue more than most other companies. Perhaps the market is expecting future revenue performance to dive, which has kept the P/S suppressed. 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 out of favour.

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

Is There Any Revenue Growth Forecasted For Nordic LEVEL Group AB (publ.)?

There's an inherent assumption that a company should underperform the industry for P/S ratios like Nordic LEVEL Group AB (publ.)'s to be considered reasonable.

Retrospectively, the last year delivered an exceptional 64% 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. So we can start by confirming that the company has done a tremendous job of growing revenue over that time.

Shifting to the future, estimates from the lone analyst covering the company suggest revenue should grow by 8.6% over the next year. That's shaping up to be materially higher than the 5.0% growth forecast for the broader industry.

With this in consideration, we find it intriguing that Nordic LEVEL Group AB (publ.)'s P/S sits behind most of its industry peers. It looks like most investors are not convinced at all that the company can achieve future growth expectations.

The Bottom Line On Nordic LEVEL Group AB (publ.)'s P/S

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.

Nordic LEVEL Group AB (publ.)'s analyst forecasts revealed that its superior revenue outlook isn't contributing to its P/S anywhere near as much as we would have predicted. There could be some major risk factors that are placing downward pressure on the P/S ratio. At least price risks look to be very low, but investors seem to think future revenues could see a lot of volatility.

It's always necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with Nordic LEVEL Group AB (publ.) (at least 1 which shouldn't be ignored), and understanding these should be part of your investment process.

If you're unsure about the strength of Nordic LEVEL Group 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.