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華爾街日報Slammed 31% Gogo Inc. (NASDAQ:GOGO) Screens Well Here But There Might Be A Catch
To the annoyance of some shareholders, Gogo Inc. (NASDAQ:GOGO) shares are down a considerable 31% in the last month, which continues a horrid run for the company. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 42% in that time.
Since its price has dipped substantially, considering around half the companies operating in the United States' Wireless Telecom industry have price-to-sales ratios (or "P/S") above 1.4x, you may consider Gogo as an solid investment opportunity with its 0.8x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.
See our latest analysis for Gogo
How Has Gogo Performed Recently?
Gogo certainly has been doing a good job lately as it's been growing revenue more than most other companies. It might be that many expect the strong revenue performance to degrade substantially, which has repressed the share price, and thus the P/S ratio. If the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Gogo.Is There Any Revenue Growth Forecasted For Gogo?
The only time you'd be truly comfortable seeing a P/S as low as Gogo's is when the company's growth is on track to lag the industry.
Taking a look back first, we see that the company grew revenue by an impressive 102% last year. Pleasingly, revenue has also lifted 111% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.
Looking ahead now, revenue is anticipated to climb by 12% during the coming year according to the four analysts following the company. That's shaping up to be materially higher than the 5.2% growth forecast for the broader industry.
With this in consideration, we find it intriguing that Gogo's P/S sits behind most of its industry peers. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.
The Bottom Line On Gogo's P/S
Gogo's P/S has taken a dip along with its share price. 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.
To us, it seems Gogo currently trades on a significantly depressed P/S given its forecasted revenue growth is higher than the rest of its industry. There could be some major risk factors that are placing downward pressure on the P/S ratio. At least price risks look to be very low, but investors seem to think future revenues could see a lot of volatility.
A lot of potential risks can sit within a company's balance sheet. Our free balance sheet analysis for Gogo with six simple checks will allow you to discover any risks that could be an issue.
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).
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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.