Triunfo Participações e Investimentos S.A. (BVMF:TPIS3) Held Back By Insufficient Growth Even After Shares Climb 27%
Triunfo Participações e Investimentos S.A. (BVMF:TPIS3) shareholders have had their patience rewarded with a 27% share price jump in the last month. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 12% over that time.
Even after such a large jump in price, Triunfo Participações e Investimentos' price-to-sales (or "P/S") ratio of 0.2x might still make it look like a strong buy right now compared to the wider Infrastructure industry in Brazil, where around half of the companies have P/S ratios above 2.2x and even P/S above 5x are quite common. 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 Triunfo Participações e Investimentos
How Has Triunfo Participações e Investimentos Performed Recently?
Revenue has risen firmly for Triunfo Participações e Investimentos recently, which is pleasing to see. It might be that many expect the respectable revenue performance to degrade substantially, which has repressed the P/S. Those who are bullish on Triunfo Participações e Investimentos will be hoping that this isn't the case, so that they can pick up the stock at a lower valuation.
We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Triunfo Participações e Investimentos' earnings, revenue and cash flow.How Is Triunfo Participações e Investimentos' Revenue Growth Trending?
In order to justify its P/S ratio, Triunfo Participações e Investimentos would need to produce anemic growth that's substantially trailing the industry.
Retrospectively, the last year delivered a decent 11% gain to the company's revenues. Revenue has also lifted 11% in aggregate from three years ago, partly thanks to the last 12 months of growth. Accordingly, shareholders would have probably been satisfied with the medium-term rates of revenue growth.
Comparing that to the industry, which is predicted to deliver 11% growth in the next 12 months, the company's momentum is weaker, based on recent medium-term annualised revenue results.
With this information, we can see why Triunfo Participações e Investimentos is trading at a P/S lower than the industry. Apparently many shareholders weren't comfortable holding on to something they believe will continue to trail the wider industry.
The Bottom Line On Triunfo Participações e Investimentos' P/S
Triunfo Participações e Investimentos' recent share price jump still sees fails to bring its P/S alongside the industry median. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.
In line with expectations, Triunfo Participações e Investimentos maintains its low P/S on the weakness of its recent three-year growth being lower than the wider industry forecast. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. If recent medium-term revenue trends continue, it's hard to see the share price experience a reversal of fortunes anytime soon.
Before you settle on your opinion, we've discovered 3 warning signs for Triunfo Participações e Investimentos (1 is concerning!) that 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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