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Shares of Selected Textiles SA (ATH:EPIL) are lagging the sector, but so is the company

You might think this happens with a price-to-sales ratio (or ‘P/S’) of 0.5x Selected Textiles SA (ATH:EPIL) is a stock worth watching as almost half of all luxury companies in Greece have a price-to-earnings ratio of more than 1x and even a price-to-earnings ratio of more than 5x is not uncommon. Although it is not wise to just take the P/S at face value as there may be an explanation as to why it is limited.

Check out our latest analysis for Selected Textiles

ps-multiple-vs-industry
ATSE: EPIL Price to Sales Ratio vs. Industry June 20, 2024

What does Selected Textiles’ recent performance look like?

To illustrate: sales at Selected Textiles have deteriorated over the past year, which is certainly not ideal. Perhaps the market believes that recent revenue performance is not good enough to keep the sector afloat, causing the price/earnings ratio to suffer. Those bullish on Selected Textiles will hope this isn’t the case so they can buy the stock at a lower valuation.

Do you want a complete picture of the company’s income, turnover and cash flow? Then our free report on Selected Textiles will help you shed light on its historical performance.

What is the trend in sales growth of Selected Textiles?

The only time you’ll really feel comfortable seeing a P/S as low as Selected Textiles’ is when the company’s growth is on track to lag the industry.

Retrospectively, the past year saw a frustrating 46% drop in the company’s revenue. This means that sales have also fallen in the longer term, as sales have fallen by 38% in total over the past three years. Unfortunately, we have to acknowledge that the company hasn’t done a good job of growing revenue over that time.

Comparing that to the industry, which is expected to grow 6.6% over the next twelve months, the company’s downward momentum based on recent revenue results is a sobering picture over the medium term.

In light of this, it’s understandable that Selected Textiles’ P/S is lower than most other companies. Nevertheless, there is no guarantee that the P/S has already bottomed out and that sales will turn around. It’s possible that the price-to-earnings ratio could fall to an even lower level if the company doesn’t improve its revenue growth.

The result of the P/S of selected textile products

While the price-to-sales ratio shouldn’t be the determining factor in whether or not you buy a stock, it is a good barometer of revenue expectations.

It is no surprise that Selected Textiles maintains its low P/S due to declining sales in the medium term. At this point, shareholders accept the low price-to-earnings ratio, as they admit that future earnings are unlikely to deliver any pleasant surprises either. Given current conditions, it seems unlikely that the share price will see any significant movement in either direction in the near future if recent revenue trends continue over the medium term.

Remember that there may be other risks. For example, we identified ourselves 4 Warning Signs for Selected Textiles that you should be aware of.

If this risks will make you reconsider your opinion of Selected Textilesexplore our interactive list of high-quality stocks to get an idea of ​​what else is out there.

Valuation is complex, but we help make it simple.

Invent or Selected textiles may be over or undervalued if you look at our comprehensive analysis, including fair value estimates, risks and cautions, dividends, insider transactions and financial health.

View the Free Analysis

Do you have feedback on this article? Worried about the content? Please contact us directly from us. You can also email the editorial team (at) Simplywallst.com.

This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. We aim to provide you with targeted, long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no positions in the stocks mentioned.

Valuation is complex, but we help make it simple.

Invent or Selected textiles may be over or undervalued if you look at our comprehensive analysis, including fair value estimates, risks and cautions, dividends, insider transactions and financial health.

View the Free Analysis

Do you have feedback on this article? Worried about the content? Please contact us directly. You can also send an email to [email protected]

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