Unfortunately for some shareholders, the Top Shelf International Holdings Ltd (ASX:TSI) share price has dived 39% in the last thirty days, prolonging recent pain. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 81% loss during that time.
In spite of the heavy fall in price, there still wouldn't be many who think Top Shelf International Holdings' price-to-sales (or "P/S") ratio of 1.1x is worth a mention when the median P/S in Australia's Beverage industry is similar at about 0.9x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.
View our latest analysis for Top Shelf International Holdings
How Top Shelf International Holdings Has Been Performing
Top Shelf International Holdings certainly has been doing a good job lately as it's been growing revenue more than most other companies. It might be that many expect the strong revenue performance to wane, which has kept the P/S ratio from rising. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.
Want the full picture on analyst estimates for the company? Then our free report on Top Shelf International Holdings will help you uncover what's on the horizon.
Is There Some Revenue Growth Forecasted For Top Shelf International Holdings?
The only time you'd be comfortable seeing a P/S like Top Shelf International Holdings' is when the company's growth is tracking the industry closely.
Taking a look back first, we see that the company grew revenue by an impressive 22% last year. The strong recent performance means it was also able to grow revenue by 227% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.
Shifting to the future, estimates from the three analysts covering the company suggest revenue should grow by 85% per annum over the next three years. With the industry only predicted to deliver 8.5% per year, the company is positioned for a stronger revenue result.
With this in consideration, we find it intriguing that Top Shelf International Holdings' P/S is closely matching its industry peers. It may be that most investors aren't convinced the company can achieve future growth expectations.
What We Can Learn From Top Shelf International Holdings' P/S?
Following Top Shelf International Holdings' share price tumble, its P/S is just clinging on to the industry median 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.