Investors Interested In Ardagh Metal Packaging S.A.'s (NYSE:AMBP) Revenues

With a median price-to-sales (or "P/S") ratio of close to 0.8x in the Packaging industry in the United States, you could be forgiven for feeling indifferent about Ardagh Metal Packaging S.A.'s (NYSE:AMBP) P/S ratio of 0.4x. 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 Ardagh Metal Packaging

How Ardagh Metal Packaging Has Been Performing

Ardagh Metal Packaging certainly has been doing a good job lately as its revenue growth has been positive while most other companies have been seeing their revenue go backwards. It might be that many expect the strong revenue performance to deteriorate like the rest, which has kept the P/S ratio from rising. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.

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

Is There Some Revenue Growth Forecasted For Ardagh Metal Packaging?

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

Taking a look back first, we see that the company managed to grow revenues by a handy 2.6% last year. Pleasingly, revenue has also lifted 39% 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.

Turning to the outlook, the next three years should generate growth of 3.1% per annum as estimated by the five analysts watching the company. With the industry predicted to deliver 2.3% growth per annum, the company is positioned for a comparable revenue result.

In light of this, it's understandable that Ardagh Metal Packaging's P/S sits in line with the majority of other companies. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

The Key Takeaway

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.

We've seen that Ardagh Metal Packaging maintains an adequate P/S seeing as its revenue growth figures match the rest of the industry. Right now shareholders are comfortable with the P/S as they are quite confident future revenue won't throw up any surprises. If all things remain constant, the possibility of a drastic share price movement remains fairly remote.

Having said that, be aware Ardagh Metal Packaging is showing 2 warning signs in our investment analysis, you should know about.

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.