A Piece Of The Puzzle Missing From Hyster-Yale Materials Handling, Inc.'s (NYSE:HY) 30% Share Price Climb

Hyster-Yale Materials Handling, Inc. (NYSE:HY) shares have continued their recent momentum with a 30% gain in the last month alone. The annual gain comes to 142% following the latest surge, making investors sit up and take notice.

In spite of the firm bounce in price, given about half the companies operating in the United States' Machinery industry have price-to-sales ratios (or "P/S") above 1.4x, you may still consider Hyster-Yale Materials Handling as an attractive investment with its 0.3x P/S ratio. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

Check out our latest analysis for Hyster-Yale Materials Handling

What Does Hyster-Yale Materials Handling's Recent Performance Look Like?

Hyster-Yale Materials Handling certainly has been doing a good job lately as it's been growing revenue more than most other companies. One possibility is that the P/S ratio is low because investors think this strong revenue performance might be less impressive moving forward. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.

Want the full picture on analyst estimates for the company? Then our free report on Hyster-Yale Materials Handling will help you uncover what's on the horizon.

Do Revenue Forecasts Match The Low P/S Ratio?

Hyster-Yale Materials Handling's P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.

Taking a look back first, we see that the company grew revenue by an impressive 20% last year. The latest three year period has also seen an excellent 39% overall rise in revenue, aided by its short-term performance. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 2.4% during the coming year according to the dual analysts following the company. That's shaping up to be similar to the 2.3% growth forecast for the broader industry.

In light of this, it's peculiar that Hyster-Yale Materials Handling's P/S sits below the majority of other companies. Apparently some shareholders are doubtful of the forecasts and have been accepting lower selling prices.

What Does Hyster-Yale Materials Handling's P/S Mean For Investors?

The latest share price surge wasn't enough to lift Hyster-Yale Materials Handling's P/S close to the industry median. 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.

It looks to us like the P/S figures for Hyster-Yale Materials Handling remain low despite growth that is expected to be in line with other companies in the industry. Despite average revenue growth estimates, there could be some unobserved threats keeping the P/S low. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.

You always need to take note of risks, for example - Hyster-Yale Materials Handling has 1 warning sign we think you should be aware of.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.