Market Still Lacking Some Conviction On Horace Mann Educators Corporation (NYSE:HMN)

It's not a stretch to say that Horace Mann Educators Corporation's (NYSE:HMN) price-to-sales (or "P/S") ratio of 0.9x right now seems quite "middle-of-the-road" for companies in the Insurance industry in the United States, where the median P/S ratio is around 1x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

See our latest analysis for Horace Mann Educators

What Does Horace Mann Educators' Recent Performance Look Like?

With revenue growth that's inferior to most other companies of late, Horace Mann Educators 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.

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

Is There Some Revenue Growth Forecasted For Horace Mann Educators?

There's an inherent assumption that a company should be matching the industry for P/S ratios like Horace Mann Educators' to be considered reasonable.

Retrospectively, the last year delivered a decent 11% gain to the company's revenues. The solid recent performance means it was also able to grow revenue by 15% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been respectable for the company.

Looking ahead now, revenue is anticipated to climb by 7.1% during the coming year according to the four analysts following the company. Meanwhile, the rest of the industry is forecast to only expand by 4.8%, which is noticeably less attractive.

In light of this, it's curious that Horace Mann Educators' P/S sits in line with the majority of other companies. It may be that most investors aren't convinced the company can achieve future growth expectations.

The Final Word

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.

Looking at Horace Mann Educators' analyst forecasts revealed that its superior revenue outlook isn't giving the boost to its P/S that we would've expected. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. However, if you agree with the analysts' forecasts, you may be able to pick up the stock at an attractive price.

It's always necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Horace Mann Educators, and understanding should be part of your investment process.

If you're unsure about the strength of Horace Mann Educators' 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.