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    Not Many Are Piling Into Ferroamp AB (publ) (STO:FERRO) Stock Yet As It Plummets 27%

    Simply Wall St·06/20/2025 04:02:36
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    Unfortunately for some shareholders, the Ferroamp AB (publ) (STO:FERRO) share price has dived 27% in the last thirty days, prolonging recent pain. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 92% loss during that time.

    Following the heavy fall in price, Ferroamp's price-to-sales (or "P/S") ratio of 0.4x might make it look like a buy right now compared to the Electrical industry in Sweden, where around half of the companies have P/S ratios above 2.3x and even P/S above 5x are quite common. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

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    See our latest analysis for Ferroamp

    ps-multiple-vs-industry
    OM:FERRO Price to Sales Ratio vs Industry June 20th 2025

    How Has Ferroamp Performed Recently?

    Ferroamp hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. The P/S ratio is probably low because investors think this poor revenue performance isn't going to get any better. If you still like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

    If you'd like to see what analysts are forecasting going forward, you should check out our free report on Ferroamp.

    What Are Revenue Growth Metrics Telling Us About The Low P/S?

    There's an inherent assumption that a company should underperform the industry for P/S ratios like Ferroamp's to be considered reasonable.

    Retrospectively, the last year delivered a frustrating 58% decrease to the company's top line. As a result, revenue from three years ago have also fallen 9.7% overall. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

    Shifting to the future, estimates from the one analyst covering the company suggest revenue should grow by 189% over the next year. With the industry only predicted to deliver 11%, the company is positioned for a stronger revenue result.

    With this in consideration, we find it intriguing that Ferroamp's P/S sits behind most of its industry peers. It looks like most investors are not convinced at all that the company can achieve future growth expectations.

    The Bottom Line On Ferroamp's P/S

    Ferroamp's P/S has taken a dip along with its share price. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

    A look at Ferroamp's revenues reveals that, despite glowing future growth forecasts, its P/S is much lower than we'd expect. There could be some major risk factors that are placing downward pressure on the P/S ratio. It appears the market could be anticipating revenue instability, because these conditions should normally provide a boost to the share price.

    We don't want to rain on the parade too much, but we did also find 3 warning signs for Ferroamp that you need to be mindful 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.