Investors Aren't Entirely Convinced By Hyster-Yale Materials Handling, Inc.'s (NYSE:HY) Revenues

You may think that with a price-to-sales (or "P/S") ratio of 0.2x Hyster-Yale Materials Handling, Inc. (NYSE:HY) is a stock worth checking out, seeing as almost half of all the Machinery companies in the United States have P/S ratios greater than 1.4x and even P/S higher than 4x aren't out of the ordinary. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

View our latest analysis for Hyster-Yale Materials Handling

How Has Hyster-Yale Materials Handling Performed Recently?

Recent times have been advantageous for Hyster-Yale Materials Handling as its revenues have been rising faster than most other companies. Perhaps the market is expecting future revenue performance to dive, which has kept the P/S suppressed. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Hyster-Yale Materials Handling.

Is There Any Revenue Growth Forecasted For Hyster-Yale Materials Handling?

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 16% last year. The strong recent performance means it was also able to grow revenue by 46% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 1.9% during the coming year according to the two analysts following the company. That's shaping up to be similar to the 1.6% growth forecast for the broader industry.

With this information, we find it odd that Hyster-Yale Materials Handling is trading at a P/S lower than the industry. 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?

Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the 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. When we see middle-of-the-road revenue growth like this, we assume it must be the potential risks that are what is placing pressure on the P/S ratio. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.

There are also other vital risk factors to consider before investing and we've discovered 2 warning signs for Hyster-Yale Materials Handling that you should be aware of.

If you're unsure about the strength of Hyster-Yale Materials Handling'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.