Impala Platinum Holdings Limited's (JSE:IMP) P/S Is Still On The Mark Following 26% Share Price Bounce

Despite an already strong run, Impala Platinum Holdings Limited (JSE:IMP) shares have been powering on, with a gain of 26% in the last thirty days. The last 30 days bring the annual gain to a very sharp 75%.

Even after such a large jump in price, it's still not a stretch to say that Impala Platinum Holdings' price-to-sales (or "P/S") ratio of 1.4x right now seems quite "middle-of-the-road" compared to the Metals and Mining industry in South Africa, seeing as it matches the P/S ratio of the wider industry. 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 Impala Platinum Holdings

How Impala Platinum Holdings Has Been Performing

Impala Platinum Holdings 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. Perhaps the market is expecting its poor revenue performance to improve, keeping the P/S from dropping. If not, then existing shareholders may be a little nervous about the viability of the share price.

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

What Are Revenue Growth Metrics Telling Us About The P/S?

The only time you'd be comfortable seeing a P/S like Impala Platinum Holdings' is when the company's growth is tracking the industry closely.

Retrospectively, the last year delivered a frustrating 7.6% decrease to the company's top line. As a result, revenue from three years ago have also fallen 33% 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 13% during the coming year according to the seven analysts following the company. With the industry predicted to deliver 13% growth , the company is positioned for a comparable revenue result.

In light of this, it's understandable that Impala Platinum Holdings' P/S sits in line with the majority of other companies. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

What We Can Learn From Impala Platinum Holdings' P/S?

Impala Platinum Holdings' stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. 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.

A Impala Platinum Holdings' P/S seems about right to us given the knowledge that analysts are forecasting a revenue outlook that is similar to the Metals and Mining industry. Right now shareholders are comfortable with the P/S as they are quite confident future revenue won't throw up any surprises. If all things remain constant, the possibility of a drastic share price movement remains fairly remote.

You always need to take note of risks, for example - Impala Platinum Holdings has 1 warning sign we think you should be aware of.

It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).

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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.