Little Excitement Around Mistras Group, Inc.'s (NYSE:MG) Revenues As Shares Take 26% Pounding

Mistras Group, Inc. (NYSE:MG) shareholders won't be pleased to see that the share price has had a very rough month, dropping 26% and undoing the prior period's positive performance. Still, a bad month hasn't completely ruined the past year with the stock gaining 44%, which is great even in a bull market.

In spite of the heavy fall in price, Mistras Group's price-to-sales (or "P/S") ratio of 0.4x might still make it look like a buy right now compared to the Professional Services industry in the United States, 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.

View our latest analysis for Mistras Group

How Has Mistras Group Performed Recently?

Recent times haven't been great for Mistras Group as its revenue has been rising slower than most other companies. The P/S ratio is probably low because investors think this lacklustre revenue performance isn't going to get any better. 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.

Want the full picture on analyst estimates for the company? Then our free report on Mistras Group will help you uncover what's on the horizon.

Is There Any Revenue Growth Forecasted For Mistras Group?

The only time you'd be truly comfortable seeing a P/S as low as Mistras Group's is when the company's growth is on track to lag the industry.

Retrospectively, the last year delivered a decent 6.8% gain to the company's revenues. The solid recent performance means it was also able to grow revenue by 11% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been respectable for the company.

Shifting to the future, estimates from the dual analysts covering the company suggest revenue should grow by 1.4% over the next year. That's shaping up to be materially lower than the 6.7% growth forecast for the broader industry.

In light of this, it's understandable that Mistras Group's P/S sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

What Does Mistras Group's P/S Mean For Investors?

Mistras Group's P/S has taken a dip along with its share price. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

We've established that Mistras Group maintains its low P/S on the weakness of its forecast growth being lower than the wider industry, as expected. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. It's hard to see the share price rising strongly in the near future under these circumstances.

Plus, you should also learn about these 4 warning signs we've spotted with Mistras Group (including 1 which is potentially serious).

If these risks are making you reconsider your opinion on Mistras Group, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.