Despite an already strong run, Tutor Perini Corporation (NYSE:TPC) shares have been powering on, with a gain of 26% in the last thirty days.    The last 30 days bring the annual gain to a very sharp 30%.   In spite of the firm bounce in price, considering around half the companies operating in the United States' Construction industry have price-to-sales ratios (or "P/S") above 0.9x, you may still consider Tutor Perini as an solid investment opportunity with its 0.2x 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.  

NYSE:TPC Price to Sales Ratio vs Industry March 1st 2024

How Tutor Perini Has Been Performing

Recent times haven't been great for Tutor Perini as its revenue has been rising slower than most other companies.   The P/S ratio is probably low because investors think this lacklustre revenue performance isn't going to get any better.  If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.    

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

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

In order to justify its P/S ratio, Tutor Perini would need to produce sluggish growth that's trailing the industry.  

If we review the last year of revenue, the company posted a result that saw barely any deviation from a year ago.   This isn't what shareholders were looking for as it means they've been left with a 27% decline in revenue over the last three years in total.  Therefore, it's fair to say the revenue growth recently has been undesirable for the company.  

Turning to the outlook, the next year should generate growth of 13%  as estimated by the two analysts watching the company.  Meanwhile, the rest of the industry is forecast to only expand by 9.3%, which is noticeably less attractive.

In light of this, it's peculiar that Tutor Perini's P/S sits below the majority of other companies.  It looks like most investors are not convinced at all that the company can achieve future growth expectations.  

The Key Takeaway

Despite Tutor Perini's share price climbing recently, its P/S still lags most other companies.      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.

Tutor Perini's analyst forecasts revealed that its superior revenue outlook isn't contributing to its P/S anywhere near as much as we would have predicted.  There could be some major risk factors that are placing downward pressure on the P/S ratio.  It appears the market could be anticipating revenue instability, because these conditions should normally provide a boost to the share price.    

There are also other vital risk factors to consider before investing and we've discovered 2 warning signs for Tutor Perini that you should be aware of.  

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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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.