Even With A 35% Surge, Cautious Investors Are Not Rewarding Tutor Perini Corporation's (NYSE:TPC) Performance Completely

Despite an already strong run, Tutor Perini Corporation (NYSE:TPC) shares have been powering on, with a gain of 35% in the last thirty days. The last month tops off a massive increase of 168% in the last year.

In spite of the firm bounce in price, it would still be understandable if you think Tutor Perini is a stock with good investment prospects with a price-to-sales ratios (or "P/S") of 0.2x, considering almost half the companies in the United States' Construction industry have P/S ratios above 0.9x. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

See our latest analysis for Tutor Perini

How Has Tutor Perini Performed Recently?

Recent times haven't been great for Tutor Perini as its revenue has been rising slower than most other companies. Perhaps the market is expecting the current trend of poor revenue growth to continue, which has kept the P/S suppressed. 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.

Keen to find out how analysts think Tutor Perini's future stacks up against the industry? In that case, our free report is a great place to start.

How Is Tutor Perini's Revenue Growth Trending?

In order to justify its P/S ratio, Tutor Perini would need to produce sluggish growth that's trailing the industry.

If we review the last year of revenue, the company posted a result that saw barely any deviation from a year ago. The lack of growth did nothing to help the company's aggregate three-year performance, which is an unsavory 27% drop in revenue. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

Turning to the outlook, the next three years should generate growth of 7.3% per annum as estimated by the two analysts watching the company. That's shaping up to be similar to the 7.9% per year growth forecast for the broader industry.

In light of this, it's peculiar that Tutor Perini's P/S sits below the majority of other companies. It may be that most investors are not convinced the company can achieve future growth expectations.

What We Can Learn From Tutor Perini's P/S?

Tutor Perini's stock price has surged recently, but its but its P/S still remains modest. 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.

Our examination of Tutor Perini's revealed that its P/S remains low despite analyst forecasts of revenue growth matching the wider industry. The low P/S could be an indication that the revenue growth estimates are being questioned by the market. Perhaps investors are concerned that the company could underperform against the forecasts over the near term.

It is also worth noting that we have found 2 warning signs for Tutor Perini that you need to take into consideration.

Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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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.