Getting In Cheap On Helix Energy Solutions Group, Inc. (NYSE:HLX) Might Be Difficult

With a median price-to-sales (or "P/S") ratio of close to 0.9x in the Energy Services industry in the United States, you could be forgiven for feeling indifferent about Helix Energy Solutions Group, Inc.'s (NYSE:HLX) P/S ratio of 1.1x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

Check out our latest analysis for Helix Energy Solutions Group

How Has Helix Energy Solutions Group Performed Recently?

With revenue growth that's inferior to most other companies of late, Helix Energy Solutions Group has been relatively sluggish. Perhaps the market is expecting future revenue performance to lift, which has kept the P/S from declining. If not, then existing shareholders may be a little nervous about the viability of the share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Helix Energy Solutions Group.

How Is Helix Energy Solutions Group's Revenue Growth Trending?

There's an inherent assumption that a company should be matching the industry for P/S ratios like Helix Energy Solutions Group's to be considered reasonable.

If we review the last year of revenue growth, the company posted a worthy increase of 7.7%. Pleasingly, revenue has also lifted 101% in aggregate from three years ago, partly thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing revenues over that time.

Looking ahead now, revenue is anticipated to climb by 4.3% per year during the coming three years according to the five analysts following the company. That's shaping up to be similar to the 4.0% per year growth forecast for the broader industry.

With this in mind, it makes sense that Helix Energy Solutions Group's P/S is closely matching its industry peers. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

What We Can Learn From Helix Energy Solutions Group's P/S?

We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

Our look at Helix Energy Solutions Group's revenue growth estimates show that its P/S is about what we expect, as both metrics follow closely with the industry averages. At this stage investors feel the potential for an improvement or deterioration in revenue isn't great enough to push P/S in a higher or lower direction. All things considered, if the P/S and revenue estimates contain no major shocks, then it's hard to see the share price moving strongly in either direction in the near future.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Helix Energy Solutions Group that you need to be mindful of.

If you're unsure about the strength of Helix Energy Solutions Group'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.