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    There's No Escaping THECOO Inc.'s (TSE:4255) Muted Revenues Despite A 37% Share Price Rise

    Simply Wall St·12/29/2025 21:28:03
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    THECOO Inc. (TSE:4255) shares have continued their recent momentum with a 37% gain in the last month alone. The last month tops off a massive increase of 292% in the last year.

    Although its price has surged higher, it would still be understandable if you think THECOO is a stock with good investment prospects with a price-to-sales ratios (or "P/S") of 1.1x, considering almost half the companies in Japan's Interactive Media and Services industry have P/S ratios above 1.6x. 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 THECOO

    ps-multiple-vs-industry
    TSE:4255 Price to Sales Ratio vs Industry December 29th 2025

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

    THECOO has been doing a good job lately as it's been growing revenue at a solid pace. Perhaps the market is expecting this acceptable revenue performance to take a dive, which has kept the P/S suppressed. If that doesn't eventuate, then existing shareholders have reason to be optimistic about the future direction of the share price.

    We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on THECOO's earnings, revenue and cash flow.

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

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

    Retrospectively, the last year delivered a decent 13% gain to the company's revenues. Revenue has also lifted 14% in aggregate from three years ago, partly thanks to the last 12 months of growth. So we can start by confirming that the company has actually done a good job of growing revenue over that time.

    This is in contrast to the rest of the industry, which is expected to grow by 9.7% over the next year, materially higher than the company's recent medium-term annualised growth rates.

    With this in consideration, it's easy to understand why THECOO's P/S falls short of the mark set by its industry peers. 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 Final Word

    Despite THECOO's share price climbing recently, its P/S still lags most other companies. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

    In line with expectations, THECOO maintains its low P/S on the weakness of its recent three-year growth being lower than the wider industry forecast. 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.

    You should always think about risks. Case in point, we've spotted 2 warning signs for THECOO you should be aware of, and 1 of them makes us a bit uncomfortable.

    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).