A Piece Of The Puzzle Missing From Vince Holding Corp.'s (NYSE:VNCE) 53% Share Price Climb

Vince Holding Corp. (NYSE:VNCE) shares have continued their recent momentum with a 53% gain in the last month alone. Looking back a bit further, it's encouraging to see the stock is up 28% in the last year.

Even after such a large jump in price, considering around half the companies operating in the United States' Luxury industry have price-to-sales ratios (or "P/S") above 0.9x, you may still consider Vince Holding as an solid investment opportunity with its 0.1x 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 Vince Holding

What Does Vince Holding's Recent Performance Look Like?

Vince Holding could be doing better as its revenue has been going backwards lately while most other companies have been seeing positive revenue growth. It seems that many are expecting the poor revenue performance to persist, which has repressed the P/S ratio. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

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

Do Revenue Forecasts Match The Low P/S Ratio?

Vince Holding'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, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 16%. Regardless, revenue has managed to lift by a handy 21% in aggregate from three years ago, thanks to the earlier period of growth. So we can start by confirming that the company has generally done a good job of growing revenue over that time, even though it had some hiccups along the way.

Turning to the outlook, the next year should generate growth of 4.2% as estimated by the two analysts watching the company. With the industry predicted to deliver 3.1% growth , the company is positioned for a comparable revenue result.

With this in consideration, we find it intriguing that Vince Holding's P/S is lagging behind its industry peers. Apparently some shareholders are doubtful of the forecasts and have been accepting lower selling prices.

The Bottom Line On Vince Holding's P/S

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

Our examination of Vince Holding's revealed that its P/S remains low despite analyst forecasts of revenue growth matching the wider 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. However, if you agree with the analysts' forecasts, you may be able to pick up the stock at an attractive price.

And what about other risks? Every company has them, and we've spotted 5 warning signs for Vince Holding (of which 2 are concerning!) you should know about.

If you're unsure about the strength of Vince Holding'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.