Investor Optimism Abounds SEACOR Marine Holdings Inc. (NYSE:SMHI) But Growth Is Lacking

With a median price-to-sales (or "P/S") ratio of close to 1x in the Energy Services industry in the United States, you could be forgiven for feeling indifferent about SEACOR Marine Holdings Inc.'s (NYSE:SMHI) P/S ratio of 1.1x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

View our latest analysis for SEACOR Marine Holdings

What Does SEACOR Marine Holdings' P/S Mean For Shareholders?

There hasn't been much to differentiate SEACOR Marine Holdings' and the industry's revenue growth lately. The P/S ratio is probably moderate because investors think this modest revenue performance will continue. If this is the case, then at least existing shareholders won't be losing sleep over the current share price.

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

Is There Some Revenue Growth Forecasted For SEACOR Marine Holdings?

In order to justify its P/S ratio, SEACOR Marine Holdings would need to produce growth that's similar to the industry.

Retrospectively, the last year delivered a decent 14% gain to the company's revenues. The latest three year period has also seen an excellent 86% overall rise in revenue, aided somewhat by its short-term performance. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Looking ahead now, revenue is anticipated to climb by 1.0% during the coming year according to the lone analyst following the company. Meanwhile, the rest of the industry is forecast to expand by 9.6%, which is noticeably more attractive.

In light of this, it's curious that SEACOR Marine Holdings' P/S sits in line with the majority of other companies. Apparently many investors in the company are less bearish than analysts indicate and aren't willing to let go of their stock right now. Maintaining these prices will be difficult to achieve as this level of revenue growth is likely to weigh down the shares eventually.

What We Can Learn From SEACOR Marine Holdings' P/S?

It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

When you consider that SEACOR Marine Holdings' revenue growth estimates are fairly muted compared to the broader industry, it's easy to see why we consider it unexpected to be trading at its current P/S ratio. At present, we aren't confident in the P/S as the predicted future revenues aren't likely to support a more positive sentiment for long. This places shareholders' investments at risk and potential investors in danger of paying an unnecessary premium.

We don't want to rain on the parade too much, but we did also find 2 warning signs for SEACOR Marine Holdings that you need to be mindful of.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

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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.

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