The Price Is Right For Zeta Global Holdings Corp. (NYSE:ZETA) Even After Diving 25%

Zeta Global Holdings Corp. (NYSE:ZETA) shareholders that were waiting for something to happen have been dealt a blow with a 25% share price drop in the last month. Of course, over the longer-term many would still wish they owned shares as the stock's price has soared 135% in the last twelve months.

In spite of the heavy fall in price, it's still not a stretch to say that Zeta Global Holdings' price-to-sales (or "P/S") ratio of 5.3x right now seems quite "middle-of-the-road" compared to the Software industry in the United States, where the median P/S ratio is around 5.5x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

View our latest analysis for Zeta Global Holdings

How Zeta Global Holdings Has Been Performing

Recent times have been advantageous for Zeta Global Holdings as its revenues have been rising faster than most other companies. One possibility is that the P/S ratio is moderate because investors think this strong revenue performance might be about to tail off. If not, then existing shareholders have reason to be feeling optimistic 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 Zeta Global Holdings.

Is There Some Revenue Growth Forecasted For Zeta Global Holdings?

Zeta Global Holdings' 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.

If we review the last year of revenue growth, the company posted a terrific increase of 30%. The strong recent performance means it was also able to grow revenue by 106% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Turning to the outlook, the next three years should generate growth of 20% per annum as estimated by the analysts watching the company. Meanwhile, the rest of the industry is forecast to expand by 21% per year, which is not materially different.

With this in mind, it makes sense that Zeta Global Holdings' P/S is closely matching its industry peers. It seems most investors are expecting to see average future growth and are only willing to pay a moderate amount for the stock.

The Bottom Line On Zeta Global Holdings' P/S

Zeta Global Holdings' plummeting stock price has brought its P/S back to a similar region as 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.

Our look at Zeta Global Holdings' revenue growth estimates show that its P/S is about what we expect, as both metrics follow closely with the industry averages. Right now shareholders are comfortable with the P/S as they are quite confident future revenue won't throw up any surprises. All things considered, if the P/S and revenue estimates contain no major shocks, then it's hard to see the share price moving strongly in either direction in the near future.

Before you take the next step, you should know about the 2 warning signs for Zeta Global Holdings that we have uncovered.

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.