Revenues Not Telling The Story For a.k.a. Brands Holding Corp. (NYSE:AKA) After Shares Rise 37%

a.k.a. Brands Holding Corp. (NYSE:AKA) shareholders have had their patience rewarded with a 37% share price jump in the last month. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 41% over that time.

In spite of the firm bounce in price, you could still be forgiven for feeling indifferent about a.k.a. Brands Holding's P/S ratio of 0.3x, since the median price-to-sales (or "P/S") ratio for the Specialty Retail industry in the United States is also close to 0.4x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

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See our latest analysis for a.k.a. Brands Holding

What Does a.k.a. Brands Holding's Recent Performance Look Like?

Recent revenue growth for a.k.a. Brands Holding has been in line with the industry. It seems that many are expecting the mediocre revenue performance to persist, which has held the P/S ratio back. Those who are bullish on a.k.a. Brands Holding will be hoping that revenue performance can pick up, so that they can pick up the stock at a slightly lower valuation.

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Is There Some Revenue Growth Forecasted For a.k.a. Brands Holding?

a.k.a. Brands Holding's P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.

Taking a look back first, we see that the company managed to grow revenues by a handy 7.7% last year. However, this wasn't enough as the latest three year period has seen an unpleasant 8.1% overall drop in revenue. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.

Shifting to the future, estimates from the five analysts covering the company suggest revenue should grow by 4.1% over the next year. With the industry predicted to deliver 7.2% growth, the company is positioned for a weaker revenue result.

In light of this, it's curious that a.k.a. Brands Holding's 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 Does a.k.a. Brands Holding's P/S Mean For Investors?

a.k.a. Brands Holding's stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

Given that a.k.a. Brands Holding's revenue growth projections are relatively subdued in comparison to the wider industry, it comes as a surprise to see it 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.

You always need to take note of risks, for example - a.k.a. Brands Holding has 2 warning signs we think you should be aware of.

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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.