To the annoyance of some shareholders, Safe & Green Holdings Corp. (NASDAQ:SGBX) shares are down a considerable 39% in the last month, which continues a horrid run for the company. For any long-term shareholders, the last month ends a year to forget by locking in a 73% share price decline.
Since its price has dipped substantially, given about half the companies operating in the United States' Construction industry have price-to-sales ratios (or "P/S") above 0.9x, you may consider Safe & Green Holdings as an attractive investment with its 0.2x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.
What Does Safe & Green Holdings' P/S Mean For Shareholders?
For instance, Safe & Green Holdings' receding revenue in recent times would have to be some food for thought. Perhaps the market believes the recent revenue performance isn't good enough to keep up the industry, causing the P/S ratio to suffer. However, if this doesn't eventuate then existing shareholders may be feeling optimistic about the future direction of the share price.
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Safe & Green Holdings will help you shine a light on its historical performance.
What Are Revenue Growth Metrics Telling Us About The Low P/S?
The only time you'd be truly comfortable seeing a P/S as low as Safe & Green Holdings' is when the company's growth is on track to lag the industry.
Retrospectively, the last year delivered a frustrating 35% decrease to the company's top line. The latest three year period has seen an incredible overall rise in revenue, a stark contrast to the last 12 months. Accordingly, shareholders will be pleased, but also have some serious questions to ponder about the last 12 months.
When compared to the industry's one-year growth forecast of 9.3%, the most recent medium-term revenue trajectory is noticeably more alluring
In light of this, it's peculiar that Safe & Green Holdings' P/S sits below the majority of other companies. It looks like most investors are not convinced the company can maintain its recent growth rates.
What We Can Learn From Safe & Green Holdings' P/S?
The southerly movements of Safe & Green Holdings' shares means its P/S is now sitting at a pretty low level. 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.
We're very surprised to see Safe & Green Holdings currently trading on a much lower than expected P/S since its recent three-year growth is higher than the wider industry forecast. When we see strong revenue with faster-than-industry growth, we assume there are some significant underlying risks to the company's ability to make money which is applying downwards pressure on the P/S ratio. At least price risks look to be very low if recent medium-term revenue trends continue, but investors seem to think future revenue could see a lot of volatility.
You should always think about risks. Case in point, we've spotted 4 warning signs for Safe & Green Holdings you should be aware of, and 3 of them don't sit too well with us.
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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有鉴于此,奇怪的是,Safe & Green Holdings的市销率低于其他多数公司。看来大多数投资者不相信该公司能够维持其最近的增长率。
我们可以从Safe & Green Holdings的市销率中学到什么?
Safe & Green Holdings股票的向南走势意味着其市销率目前处于相当低的水平。通常,在做出投资决策时,我们谨慎行事,不要过多地考虑市售比率,尽管这可以揭示其他市场参与者对公司的看法。
我们非常惊讶地看到,Safe & Green Holdings目前的市销率远低于预期,因为其最近三年的增长高于整个行业的预测。当我们看到强劲的收入和快于行业的增长速度时,我们假设公司的盈利能力存在一些重大的潜在风险,这给市销率带来了下行压力。如果最近的中期收入趋势持续下去,至少价格风险看起来很低,但投资者似乎认为未来的收入可能会出现很大的波动。
你应该时刻考虑风险。举个例子,我们发现了你应该注意的4个Safe & Green Holdings的警告信号,其中3个对我们来说不太合适。