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    ONICO S.A.'s (WSE:ONC) Low P/S No Reason For Excitement

    Simply Wall St·12/31/2025 04:21:29
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    You may think that with a price-to-sales (or "P/S") ratio of 0.2x ONICO S.A. (WSE:ONC) is a stock worth checking out, seeing as almost half of all the Oil and Gas companies in Poland have P/S ratios greater than 1.3x and even P/S higher than 4x aren't out of the ordinary. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

    Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

    See our latest analysis for ONICO

    ps-multiple-vs-industry
    WSE:ONC Price to Sales Ratio vs Industry December 31st 2025

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

    As an illustration, revenue has deteriorated at ONICO over the last year, which is not ideal at all. It might be that many expect the disappointing revenue performance to continue or accelerate, which has repressed the P/S. 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 out of favour.

    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 ONICO's earnings, revenue and cash flow.

    How Is ONICO's Revenue Growth Trending?

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

    In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 33%. This means it has also seen a slide in revenue over the longer-term as revenue is down 60% in total over the last three years. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

    In contrast to the company, the rest of the industry is expected to grow by 22% over the next year, which really puts the company's recent medium-term revenue decline into perspective.

    In light of this, it's understandable that ONICO's P/S would sit below the majority of other companies. However, we think shrinking revenues are unlikely to lead to a stable P/S over the longer term, which could set up shareholders for future disappointment. There's potential for the P/S to fall to even lower levels if the company doesn't improve its top-line growth.

    What We Can Learn From ONICO'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.

    Our examination of ONICO confirms that the company's shrinking revenue over the past medium-term is a key factor in its low price-to-sales ratio, given the industry is projected to grow. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises either. Given the current circumstances, it seems unlikely that the share price will experience any significant movement in either direction in the near future if recent medium-term revenue trends persist.

    It's always necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with ONICO, and understanding them should be part of your investment process.

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