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    Brikor Limited's (JSE:BIK) 29% Dip In Price Shows Sentiment Is Matching Revenues

    Simply Wall St·12/20/2025 07:40:38
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    The Brikor Limited (JSE:BIK) share price has fared very poorly over the last month, falling by a substantial 29%. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 14% in that time.

    Following the heavy fall in price, it would be understandable if you think Brikor is a stock with good investment prospects with a price-to-sales ratios (or "P/S") of 0.3x, considering almost half the companies in South Africa's Basic Materials industry have P/S ratios above 1.7x. 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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    View our latest analysis for Brikor

    ps-multiple-vs-industry
    JSE:BIK Price to Sales Ratio vs Industry December 20th 2025

    What Does Brikor's P/S Mean For Shareholders?

    As an illustration, revenue has deteriorated at Brikor over the last year, which is not ideal at all. Perhaps the market believes the recent revenue performance isn't good enough to keep up the industry, causing the P/S ratio to suffer. Those who are bullish on Brikor will be hoping that this isn't the case so that they can pick up the stock at a lower valuation.

    Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Brikor will help you shine a light on its historical performance.

    Is There Any Revenue Growth Forecasted For Brikor?

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

    Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 15%. That put a dampener on the good run it was having over the longer-term as its three-year revenue growth is still a noteworthy 13% in total. Accordingly, while they would have preferred to keep the run going, shareholders would be roughly satisfied with the medium-term rates of revenue growth.

    This is in contrast to the rest of the industry, which is expected to grow by 20% over the next year, materially higher than the company's recent medium-term annualised growth rates.

    In light of this, it's understandable that Brikor's P/S sits below the majority of other companies. It seems most investors are expecting to see the recent limited growth rates continue into the future and are only willing to pay a reduced amount for the stock.

    The Key Takeaway

    Brikor's P/S has taken a dip along with its share price. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

    As we suspected, our examination of Brikor revealed its three-year revenue trends are contributing to its low P/S, given they look worse than current industry expectations. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. If recent medium-term revenue trends continue, it's hard to see the share price experience a reversal of fortunes anytime soon.

    Having said that, be aware Brikor is showing 3 warning signs in our investment analysis, you should know about.

    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).