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    Frontier Management Inc. (TSE:7038) Might Not Be As Mispriced As It Looks

    Simply Wall St·01/08/2026 22:46:49
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    There wouldn't be many who think Frontier Management Inc.'s (TSE:7038) price-to-sales (or "P/S") ratio of 0.6x is worth a mention when the median P/S for the Professional Services industry in Japan is similar at about 1x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

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    Check out our latest analysis for Frontier Management

    ps-multiple-vs-industry
    TSE:7038 Price to Sales Ratio vs Industry January 8th 2026

    What Does Frontier Management's P/S Mean For Shareholders?

    Frontier Management has been doing a good job lately as it's been growing revenue at a solid pace. It might be that many expect the respectable revenue performance to wane, which has kept the P/S from rising. Those who are bullish on Frontier Management will be hoping that this isn't the case, so that they can pick up the stock at a lower valuation.

    Although there are no analyst estimates available for Frontier Management, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.

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

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

    Retrospectively, the last year delivered an exceptional 19% gain to the company's top line. The strong recent performance means it was also able to grow revenue by 46% in total over the last three years. So we can start by confirming that the company has done a great job of growing revenue over that time.

    Comparing that to the industry, which is only predicted to deliver 8.1% growth in the next 12 months, the company's momentum is stronger based on recent medium-term annualised revenue results.

    With this information, we find it interesting that Frontier Management is trading at a fairly similar P/S compared to the industry. It may be that most investors are not convinced the company can maintain its recent growth rates.

    The Bottom Line On Frontier Management's P/S

    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.

    We didn't quite envision Frontier Management's P/S sitting in line with the wider industry, considering the revenue growth over the last three-year is higher than the current industry outlook. There could be some unobserved threats to revenue preventing the P/S ratio from matching this positive performance. While recent revenue trends over the past medium-term suggest that the risk of a price decline is low, investors appear to see the likelihood of revenue fluctuations in the future.

    It's always necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Frontier Management (at least 1 which is potentially serious), and understanding them should be part of your investment process.

    It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).