Yahoo Finance Investors Aren't Buying GetBusy plc's (LON:GETB) Revenues
You may think that with a price-to-sales (or "P/S") ratio of 1.7x GetBusy plc (LON:GETB) is a stock worth checking out, seeing as almost half of all the Software companies in the United Kingdom have P/S ratios greater than 2.7x and even P/S higher than 6x aren't out of the ordinary. 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 GetBusy
How Has GetBusy Performed Recently?
Recent revenue growth for GetBusy has been in line with the industry. Perhaps the market is expecting future revenue performance to dive, which has kept the P/S suppressed. If not, then existing shareholders have reason to be optimistic about the future direction of the share price.
Keen to find out how analysts think GetBusy's future stacks up against the industry? In that case, our free report is a great place to start.
How Is GetBusy's Revenue Growth Trending?
GetBusy's P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.
If we review the last year of revenue growth, the company posted a terrific increase of 25%. The latest three year period has also seen an excellent 52% overall rise in revenue, aided by its short-term performance. So we can start by confirming that the company has done a great job of growing revenue over that time.
Looking ahead now, revenue is anticipated to climb by 6.8% during the coming year according to the dual analysts following the company. With the industry predicted to deliver 13% growth, the company is positioned for a weaker revenue result.
With this information, we can see why GetBusy is trading at a P/S lower than the industry. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.
What Does GetBusy's P/S Mean For Investors?
Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.
As we suspected, our examination of GetBusy's analyst forecasts revealed that its inferior revenue outlook is contributing to its low P/S. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.
And what about other risks? Every company has them, and we've spotted 3 warning signs for GetBusy (of which 2 don't sit too well with us!) you should know about.
If these risks are making you reconsider your opinion on GetBusy, explore our interactive list of high quality stocks to get an idea of what else is out there.
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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.
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