The Glimpse Group, Inc. (NASDAQ:VRAR) shares have had a horrible month, losing 30% after a relatively good period beforehand. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 71% loss during that time.
In spite of the heavy fall in price, there still wouldn't be many who think Glimpse Group's price-to-sales (or "P/S") ratio of 1.6x is worth a mention when the median P/S in the United States' IT industry is similar at about 1.9x. 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.
NasdaqCM:VRAR Price to Sales Ratio vs Industry March 29th 2024
How Has Glimpse Group Performed Recently?
Glimpse Group could be doing better as it's been growing revenue less than most other companies lately. Perhaps the market is expecting future revenue performance to lift, which has kept the P/S from declining. If not, then existing shareholders may be a little nervous about the viability of the share price.
Want the full picture on analyst estimates for the company? Then our free report on Glimpse Group will help you uncover what's on the horizon.
Is There Some Revenue Growth Forecasted For Glimpse Group?
The only time you'd be comfortable seeing a P/S like Glimpse Group's is when the company's growth is tracking the industry closely.
Taking a look back first, we see that the company managed to grow revenues by a handy 2.7% last year. While this performance is only fair, the company was still 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 18% during the coming year according to the one analyst following the company. That's shaping up to be materially higher than the 9.3% growth forecast for the broader industry.
With this in consideration, we find it intriguing that Glimpse Group's P/S is closely matching its industry peers. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.
The Final Word
Following Glimpse Group's share price tumble, its P/S is just clinging on to the industry median P/S. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.
Looking at Glimpse Group's analyst forecasts revealed that its superior revenue outlook isn't giving the boost to its P/S that we would've expected. When we see a strong revenue outlook, with growth outpacing the industry, we can only assume potential uncertainty around these figures are what might be placing slight pressure on the P/S ratio. This uncertainty seems to be reflected in the share price which, while stable, could be higher given the revenue forecasts.
We don't want to rain on the parade too much, but we did also find 5 warning signs for Glimpse Group (1 is potentially serious!) that you need to be mindful of.
If these risks are making you reconsider your opinion on Glimpse Group, 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.