A Piece Of The Puzzle Missing From Altisource Portfolio Solutions S.A.'s (NASDAQ:ASPS) 28% Share Price Climb

Those holding Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) shares would be relieved that the share price has rebounded 28% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. Still, the 30-day jump doesn't change the fact that longer term shareholders have seen their stock decimated by the 56% share price drop in the last twelve months.

Even after such a large jump in price, Altisource Portfolio Solutions' price-to-sales (or "P/S") ratio of 0.4x might still make it look like a buy right now compared to the Real Estate industry in the United States, where around half of the companies have P/S ratios above 1.9x and even P/S above 10x are quite common. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

See our latest analysis for Altisource Portfolio Solutions

What Does Altisource Portfolio Solutions' Recent Performance Look Like?

While the industry has experienced revenue growth lately, Altisource Portfolio Solutions' revenue has gone into reverse gear, which is not great. It seems that many are expecting the poor revenue performance to persist, which has repressed the P/S ratio. So while you could say the stock is cheap, investors will be looking for improvement before they see it as good value.

Want the full picture on analyst estimates for the company? Then our free report on Altisource Portfolio Solutions will help you uncover what's on the horizon.

How Is Altisource Portfolio Solutions' Revenue Growth Trending?

The only time you'd be truly comfortable seeing a P/S as low as Altisource Portfolio Solutions' is when the company's growth is on track to lag the industry.

Retrospectively, the last year delivered a frustrating 5.2% decrease to the company's top line. As a result, revenue from three years ago have also fallen 51% overall. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.

Looking ahead now, revenue is anticipated to climb by 32% during the coming year according to the dual analysts following the company. That's shaping up to be materially higher than the 13% growth forecast for the broader industry.

In light of this, it's peculiar that Altisource Portfolio Solutions' P/S sits below the majority of other companies. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.

What Does Altisource Portfolio Solutions' P/S Mean For Investors?

The latest share price surge wasn't enough to lift Altisource Portfolio Solutions' P/S close to the industry median. 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.

Altisource Portfolio Solutions' analyst forecasts revealed that its superior revenue outlook isn't contributing to its P/S anywhere near as much as we would have predicted. There could be some major risk factors that are placing downward pressure on the P/S ratio. It appears the market could be anticipating revenue instability, because these conditions should normally provide a boost to the share price.

Before you take the next step, you should know about the 4 warning signs for Altisource Portfolio Solutions (2 make us uncomfortable!) that we have uncovered.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.