Yahoo Finance Quisitive Technology Solutions, Inc.'s (CVE:QUIS) Low P/S No Reason For Excitement
With a price-to-sales (or "P/S") ratio of 0.5x Quisitive Technology Solutions, Inc. (CVE:QUIS) may be sending very bullish signals at the moment, given that almost half of all the Software companies in Canada have P/S ratios greater than 3.7x and even P/S higher than 13x are not unusual. However, the P/S might be quite low for a reason and it requires further investigation to determine if it's justified.
View our latest analysis for Quisitive Technology Solutions
How Quisitive Technology Solutions Has Been Performing
Recent times have been advantageous for Quisitive Technology Solutions as its revenues have been rising faster than most other companies. One possibility is that the P/S ratio is low because investors think this strong revenue performance might be less impressive moving forward. If not, then existing shareholders have reason to be quite 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 Quisitive Technology Solutions.
Is There Any Revenue Growth Forecasted For Quisitive Technology Solutions?
In order to justify its P/S ratio, Quisitive Technology Solutions would need to produce anemic growth that's substantially trailing the industry.
Retrospectively, the last year delivered an exceptional 48% gain to the company's top line. This great performance means it was also able to deliver immense revenue growth over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.
Looking ahead now, revenue is anticipated to climb by 9.9% per year during the coming three years according to the eight analysts following the company. With the industry predicted to deliver 20% growth each year, the company is positioned for a weaker revenue result.
With this information, we can see why Quisitive Technology Solutions is trading at a P/S lower than the industry. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.
The Bottom Line On Quisitive Technology Solutions' P/S
We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.
As we suspected, our examination of Quisitive Technology Solutions' 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. It's hard to see the share price rising strongly in the near future under these circumstances.
You should always think about risks. Case in point, we've spotted 3 warning signs for Quisitive Technology Solutions you should be aware of.
Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.
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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.
