iClick Interactive Asia Group Limited (NASDAQ:ICLK) Could Be Riskier Than It Looks

When close to half the companies operating in the Media industry in the United States have price-to-sales ratios (or "P/S") above 0.8x, you may consider iClick Interactive Asia Group Limited (NASDAQ:ICLK) as an attractive investment with its 0.2x P/S ratio. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

View our latest analysis for iClick Interactive Asia Group

How iClick Interactive Asia Group Has Been Performing

iClick Interactive Asia Group hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. The P/S ratio is probably low because investors think this poor revenue performance isn't going to get any better. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on iClick Interactive Asia Group.

Is There Any Revenue Growth Forecasted For iClick Interactive Asia Group?

There's an inherent assumption that a company should underperform the industry for P/S ratios like iClick Interactive Asia Group's to be considered reasonable.

Retrospectively, the last year delivered a frustrating 39% decrease to the company's top line. The last three years don't look nice either as the company has shrunk revenue by 31% in aggregate. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.

Turning to the outlook, the next year should generate growth of 2.3% as estimated by the sole analyst watching the company. With the industry predicted to deliver 3.8% growth , the company is positioned for a comparable revenue result.

With this information, we find it odd that iClick Interactive Asia Group is trading at a P/S lower than the industry. It may be that most investors are not convinced the company can achieve future growth expectations.

The Key Takeaway

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 iClick Interactive Asia Group'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. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.

It is also worth noting that we have found 2 warning signs for iClick Interactive Asia Group (1 is concerning!) that you need to take into consideration.

If you're unsure about the strength of iClick Interactive Asia 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.