Source: Shutterstock With a price-to-sales (or “P/S”) ratio of 0.6x Embraer S.A. ( BVMF:EMBR3 ) may be sending very bullish signals at the moment, given that almost half of all the Aerospace & Defense companies in Brazil have P/S ratios greater than 2.6x and even P/S higher than 7x […]
How Has Embraer Performed Recently?
Recent times have been advantageous for Embraer as its revenues have been rising faster 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.
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Do Revenue Forecasts Match The Low P/S Ratio?
There’s an inherent assumption that a company should far underperform the industry for P/S ratios like Embraer’s to be considered reasonable.
If we review the last year of revenue growth, the company posted a terrific increase of 32%. Pleasingly, revenue has also lifted 46% 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.
If we review the last year of revenue growth, the company posted a terrific increase of 32%. Pleasingly, revenue has also lifted 46% 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.