Revenues Tell The Story For Aeroports de Paris SA (EPA:ADP)
It's not a stretch to say that Aeroports de Paris SA's (EPA:ADP) price-to-sales (or "P/S") ratio of 1.7x seems quite "middle-of-the-road" for Infrastructure companies in France, seeing as it matches the P/S ratio of the wider industry. 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.
See our latest analysis for Aeroports de Paris
How Has Aeroports de Paris Performed Recently?
Aeroports de Paris 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 the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.
Keen to find out how analysts think Aeroports de Paris' future stacks up against the industry? In that case, our free report is a great place to start.Do Revenue Forecasts Match The P/S Ratio?
There's an inherent assumption that a company should be matching the industry for P/S ratios like Aeroports de Paris' to be considered reasonable.
Taking a look back first, we see that the company managed to grow revenues by a handy 10% last year. The latest three year period has also seen an excellent 70% overall rise in revenue, aided somewhat by its short-term performance. So we can start by confirming that the company has done a great job of growing revenues over that time.
Looking ahead now, revenue is anticipated to climb by 4.7% per annum during the coming three years according to the analysts following the company. With the industry predicted to deliver 3.7% growth per annum, the company is positioned for a comparable revenue result.
In light of this, it's understandable that Aeroports de Paris' P/S sits in line with the majority of other companies. It seems most investors are expecting to see average future growth and are only willing to pay a moderate amount for the stock.
The Final Word
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.
A Aeroports de Paris' P/S seems about right to us given the knowledge that analysts are forecasting a revenue outlook that is similar to the Infrastructure industry. At this stage investors feel the potential for an improvement or deterioration in revenue isn't great enough to push P/S in a higher or lower direction. Unless these conditions change, they will continue to support the share price at these levels.
Before you take the next step, you should know about the 3 warning signs for Aeroports de Paris (1 makes us a bit uncomfortable!) that we have uncovered.
If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).
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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.