Industrias Peñoles, S.A.B. de C.V. (BMV:PE&OLES) Could Be Riskier Than It Looks

It's not a stretch to say that Industrias Peñoles, S.A.B. de C.V.'s (BMV:PE&OLES) price-to-sales (or "P/S") ratio of 2.2x seems quite "middle-of-the-road" for Metals and Mining companies in Mexico, 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.

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See our latest analysis for Industrias Peñoles. de

What Does Industrias Peñoles. de's P/S Mean For Shareholders?

Recent times have been advantageous for Industrias Peñoles. de as its revenues have been rising faster than most other companies. Perhaps the market is expecting this level of performance to taper off, keeping the P/S from soaring. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's not quite in favour.

Keen to find out how analysts think Industrias Peñoles. de's future stacks up against the industry? In that case, our free report is a great place to start.

How Is Industrias Peñoles. de's Revenue Growth Trending?

There's an inherent assumption that a company should be matching the industry for P/S ratios like Industrias Peñoles. de's to be considered reasonable.

Retrospectively, the last year delivered an exceptional 24% gain to the company's top line. Pleasingly, revenue has also lifted 39% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 9.3% during the coming year according to the five analysts following the company. That's shaping up to be materially higher than the 6.6% growth forecast for the broader industry.

With this information, we find it interesting that Industrias Peñoles. de is trading at a fairly similar P/S compared to the industry. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.

The Bottom Line On Industrias Peñoles. de's P/S

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.

Looking at Industrias Peñoles. de's analyst forecasts revealed that its superior revenue outlook isn't giving the boost to its P/S that we would've expected. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. However, if you agree with the analysts' forecasts, you may be able to pick up the stock at an attractive price.

You always need to take note of risks, for example - Industrias Peñoles. de has 1 warning sign we think you should be aware of.

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.