You may think that with a price-to-sales (or "P/S") ratio of 2.7x Cerence Inc. (NASDAQ:CRNC) is a stock worth checking out, seeing as almost half of all the Software companies in the United States have P/S ratios greater than 4.5x and even P/S higher than 11x aren't out of the ordinary. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.
View our latest analysis for Cerence
NasdaqGS:CRNC Price to Sales Ratio vs Industry December 23rd 2023
How Has Cerence Performed Recently?
Cerence hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. It seems that many are expecting the poor revenue performance to persist, which has repressed the P/S ratio. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Cerence.
Is There Any Revenue Growth Forecasted For Cerence?
Cerence'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.
Retrospectively, the last year delivered a frustrating 10% decrease to the company's top line. This means it has also seen a slide in revenue over the longer-term as revenue is down 11% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.
Looking ahead now, revenue is anticipated to climb by 7.3% each year during the coming three years according to the eight analysts following the company. With the industry predicted to deliver 17% growth each year, the company is positioned for a weaker revenue result.
With this information, we can see why Cerence is trading at a P/S lower than the industry. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.
The Key Takeaway
It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.
As expected, our analysis of Cerence's analyst forecasts confirms that the company's underwhelming revenue outlook is a major contributor to its low P/S. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. It's hard to see the share price rising strongly in the near future under these circumstances.
Before you take the next step, you should know about the 2 warning signs for Cerence that we have uncovered.
If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.
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「P/S(Price-to-Sales Ratio)」比率が2.7倍であるCerence Inc. (NASDAQ:CRNC)株は、アメリカ合衆国の多くのソフトウェア企業の約半数が4.5倍以上のP/S比率を持っており、11倍以上の高いP/S比率も珍しくありませんので、注目すべき株であると考える方もいるかもしれません。しかし、減少したP/S比率の合理的な根拠を判断するためには、もう少し深く掘り下げる必要があります。
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オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。