You may think that with a price-to-sales (or "P/S") ratio of 1.6x BGC Group, Inc. (NASDAQ:BGC) is a stock worth checking out, seeing as almost half of all the Capital Markets companies in the United States have P/S ratios greater than 2.9x and even P/S higher than 8x 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.  

View our latest analysis for BGC Group

NasdaqGS:BGC Price to Sales Ratio vs Industry December 18th 2023

What Does BGC Group's Recent Performance Look Like?

BGC Group certainly has been doing a good job lately as it's been growing revenue more than most other companies.   Perhaps the market is expecting future revenue performance to dive, which has kept the P/S suppressed.  If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.    

Want the full picture on analyst estimates for the company? Then our free report on BGC Group will help you uncover what's on the horizon.  

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

BGC Group's P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.  

Taking a look back first, we see that the company managed to grow revenues by a handy 6.4% last year.   Still, lamentably revenue has fallen 6.0% in aggregate from three years ago, which is disappointing.  Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.  

Looking ahead now, revenue is anticipated to climb by 13% during the coming year according to the one analyst following the company.  Meanwhile, the rest of the industry is forecast to only expand by 8.8%, which is noticeably less attractive.

With this in consideration, we find it intriguing that BGC Group's P/S sits behind most of its industry peers.  It looks like most investors are not convinced at all that the company can achieve future growth expectations.  

What We Can Learn From BGC Group's P/S?

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.

A look at BGC Group's revenues reveals that, despite glowing future growth forecasts, its P/S is much lower than we'd expect.  There could be some major risk factors that are placing downward pressure on the P/S ratio.  While the possibility of the share price plunging seems unlikely due to the high growth forecasted for the company, the market does appear to have some hesitation.    

There are also other vital risk factors to consider before investing and we've discovered 4 warning signs for BGC Group that you should be aware of.  

If you're unsure about the strength of BGC Group's 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.