After Leaping 29% Freightos Limited (NASDAQ:CRGO) Shares Are Not Flying Under The Radar

Freightos Limited (NASDAQ:CRGO) shareholders are no doubt pleased to see that the share price has bounced 29% in the last month, although it is still struggling to make up recently lost ground. Taking a wider view, although not as strong as the last month, the full year gain of 14% is also fairly reasonable.

Following the firm bounce in price, you could be forgiven for thinking Freightos is a stock to steer clear of with a price-to-sales ratios (or "P/S") of 5x, considering almost half the companies in the United States' Logistics industry have P/S ratios below 0.6x. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.

Our free stock report includes 2 warning signs investors should be aware of before investing in Freightos. Read for free now.

See our latest analysis for Freightos

How Has Freightos Performed Recently?

With revenue growth that's superior to most other companies of late, Freightos has been doing relatively well. It seems that many are expecting the strong revenue performance to persist, which has raised the P/S. However, if this isn't the case, investors might get caught out paying too much for the stock.

Keen to find out how analysts think Freightos' future stacks up against the industry? In that case, our free report is a great place to start.

How Is Freightos' Revenue Growth Trending?

There's an inherent assumption that a company should far outperform the industry for P/S ratios like Freightos' to be considered reasonable.

If we review the last year of revenue growth, the company posted a terrific increase of 22%. Pleasingly, revenue has also lifted 95% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 26% per annum during the coming three years according to the three analysts following the company. With the industry only predicted to deliver 2.8% per annum, the company is positioned for a stronger revenue result.

In light of this, it's understandable that Freightos' P/S sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Key Takeaway

Shares in Freightos have seen a strong upwards swing lately, which has really helped boost its P/S figure. 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.

We've established that Freightos maintains its high P/S on the strength of its forecasted revenue growth being higher than the the rest of the Logistics industry, as expected. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. Unless these conditions change, they will continue to provide strong support to the share price.

Don't forget that there may be other risks. For instance, we've identified 2 warning signs for Freightos (1 makes us a bit uncomfortable) you should be aware of.

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.