Tribe Property Technologies Inc. (CVE:TRBE) represents almost half of all software companies and with a price-to-sales (P/S) ratio of 0.6, it’s definitely a stock worth checking out. You may think so. In Canada, P/S ratios are over 3.5x, and even P/S over 8x are not uncommon. However, the P/S may be very low for some reason and further investigation is required to determine if it is justified.
Check out our latest analysis for Tribe Property Technologies.
TSXV:TRBE Price-to-Sales Ratio vs. Industry October 16, 2024
How has Tribe Property Technologies performed recently?
Tribe Property Technologies has had slower revenue growth recently than most other companies, so it could do well. The P/S ratio is likely low because investors believe this lackluster earnings performance is not going to get any better. If you still like the company, you’ll hope that earnings don’t deteriorate any further and that you can buy the stock while it’s out of favor.
Wondering how analysts think Tribe Property Technologies’ future compares to its industry? Then our free report is the best place to start.
What do earnings growth metrics indicate about a low P/S?
There is an inherent assumption that for a profit/loss ratio like Tribe Property Technologies’ to be considered reasonable, a company must significantly underperform its industry.
First, looking back, we can see that the company managed to grow its revenue by 14% in the last year. This was backed by an impressive period before, with earnings increasing a total of 111% over the past three years. So we can start by seeing that the company has done a great job of growing its earnings over that period.
Looking to the future, the 2 analysts covering the company are estimating that its revenue should grow 38% over the next year. The company is in a position to expect stronger returns, as industry returns are expected to be only 20%.
Given this information, we find it odd that Tribe Property Technologies is trading at a lower P/S than its industry. It appears some shareholders are questioning this outlook and are accepting a significant price cut.
Tribe Property Technologies P/S Conclusion
Generally, we prefer to limit the use of price-to-sales ratios to establish what the market thinks about a company’s overall health.
Tribe Property Technologies’ analyst estimates reveal that the company’s strong earnings outlook isn’t contributing to its bottom line as much as we expected. The reason for this low P/S may be the risk factored in by the market. At least the price risk appears to be very low, but investors seem to believe that future returns can vary widely.
It is always necessary to take into account the ever-present concern of investment risks. We’ve identified 5 warning signs for Tribe Property Technologies (at least 3 of which are a bit concerning). Understanding these should be part of your investment process.
If you’re not sure about the strength of Tribe Property Technologies’ business, why not check out this interactive list of stocks with solid business fundamentals for other companies you may have missed?
Evaluation is complex, but we will simplify it here.
Discover whether Tribe Property Technologies is undervalued or overvalued with an in-depth analysis featuring fair value estimates, potential risks, dividends, insider transactions, and financial condition.
Access free analysis
Do you have feedback on this article? Interested in its content? Please contact us directly. Alternatively, email our editorial team at Simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This 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 long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
