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    Solocal Group S.A. (EPA:LOCAL) Shares Fly 26% But Investors Aren't Buying For Growth

    Simply Wall St·12/24/2025 04:10:53
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    Solocal Group S.A. (EPA:LOCAL) shares have had a really impressive month, gaining 26% after a shaky period beforehand. Looking back a bit further, it's encouraging to see the stock is up 71% in the last year.

    In spite of the firm bounce in price, Solocal Group may still be sending buy signals at present with its price-to-sales (or "P/S") ratio of 0.4x, considering almost half of all companies in the Interactive Media and Services industry in France have P/S ratios greater than 1.9x and even P/S higher than 5x aren't out of the ordinary. 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 Solocal Group

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    ENXTPA:LOCAL Price to Sales Ratio vs Industry December 24th 2025

    What Does Solocal Group's P/S Mean For Shareholders?

    Solocal Group 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.

    Want the full picture on analyst estimates for the company? Then our free report on Solocal Group will help you uncover what's on the horizon.

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

    In order to justify its P/S ratio, Solocal Group would need to produce sluggish growth that's trailing the industry.

    Retrospectively, the last year delivered virtually the same number to the company's top line as the year before. Whilst it's an improvement, it wasn't enough to get the company out of the hole it was in, with revenue down 19% overall from three years ago. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

    Looking ahead now, revenue is anticipated to slump, contracting by 0.5% during the coming year according to the two analysts following the company. With the industry predicted to deliver 5.1% growth, that's a disappointing outcome.

    In light of this, it's understandable that Solocal Group's P/S would sit below the majority of other companies. However, shrinking revenues are unlikely to lead to a stable P/S over the longer term. Even just maintaining these prices could be difficult to achieve as the weak outlook is weighing down the shares.

    What We Can Learn From Solocal Group's P/S?

    Solocal Group's stock price has surged recently, but its but its P/S still remains modest. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

    With revenue forecasts that are inferior to the rest of the industry, it's no surprise that Solocal Group's P/S is on the lower end of the spectrum. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. It's hard to see the share price rising strongly in the near future under these circumstances.

    And what about other risks? Every company has them, and we've spotted 4 warning signs for Solocal Group (of which 1 is potentially serious!) you should know about.

    If you're unsure about the strength of Solocal Group's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.