Little Excitement Around Altisource Portfolio Solutions S.A.'s (NASDAQ:ASPS) Revenues As Shares Take 29% Pounding

To the annoyance of some shareholders, Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) shares are down a considerable 29% in the last month, which continues a horrid run for the company. The recent drop has obliterated the annual return, with the share price now down 5.4% over that longer period.

In spite of the heavy fall in price, Altisource Portfolio Solutions may still look like a strong buying opportunity at present with its price-to-sales (or "P/S") ratio of 0.3x, considering almost half of all companies in the Real Estate industry in the United States have P/S ratios greater than 2.4x and even P/S higher than 9x 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 so limited.

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See our latest analysis for Altisource Portfolio Solutions

What Does Altisource Portfolio Solutions' Recent Performance Look Like?

The revenue growth achieved at Altisource Portfolio Solutions over the last year would be more than acceptable for most companies. It might be that many expect the respectable revenue performance to degrade substantially, 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.

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

How Is Altisource Portfolio Solutions' Revenue Growth Trending?

In order to justify its P/S ratio, Altisource Portfolio Solutions would need to produce anemic growth that's substantially trailing the industry.

If we review the last year of revenue growth, the company posted a worthy increase of 11%. Revenue has also lifted 8.0% in aggregate from three years ago, partly thanks to the last 12 months of growth. Accordingly, shareholders would have probably been 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 14% over the next year, materially higher than the company's recent medium-term annualised growth rates.

In light of this, it's understandable that Altisource Portfolio Solutions' P/S sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on to something they believe will continue to trail the wider industry.

The Final Word

Altisource Portfolio Solutions' P/S looks about as weak as its stock price lately. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

As we suspected, our examination of Altisource Portfolio Solutions 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. Unless the recent medium-term conditions improve, they will continue to form a barrier for the share price around these levels.

And what about other risks? Every company has them, and we've spotted 5 warning signs for Altisource Portfolio Solutions (of which 3 can't be ignored!) you should know about.

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

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.