Unfortunately for some shareholders, AMC Entertainment Holdings Co., Ltd. (NYSE:AMC) stock is down 25% over the past 30 days, lingering recent pain. For long-term shareholders, the final month marks the end of an unforgettable year for him as the stock price falls by 92%.
AMC Entertainment Holdings' price-to-sales (or “P/S”) ratio of 0.2x may now look like a buy compared to the U.S. entertainment industry after a significant drop in price. do not have. His P/S ratio for companies is over 1.2x, and companies with P/S over 4x his are also very common. Nevertheless, we need to dig a little deeper to determine whether there is a rational basis for the decline in P/S.
Check out our latest analysis for AMC Entertainment Holdings.
How has AMC Entertainment Holdings performed recently?
AMC Entertainment Holdings' revenue has been growing faster than most other companies, and it's been in a good place recently. Many are probably expecting the company's strong earnings performance to deteriorate significantly, which may be holding back the stock price and, by extension, the P/S ratio. Even if it doesn't, existing shareholders have reason to be very optimistic about the future direction of the share price.
If you want to know what analysts are predicting for the future, check out this article. free AMC Entertainment Holdings report.
What are the earnings growth trends for AMC Entertainment Holdings?
To justify AMC Entertainment Holdings' P/S ratio, it would need to generate weak growth that would put it behind the industry.
Looking back at last year's revenue growth, the company posted an impressive 23% increase. Its strong recent performance means it has been able to grow its revenue by a total of 287% over the past three years. So we can start by seeing that the company has done a great job of growing its earnings over that period.
Looking to the future, the seven analysts covering the company estimate that its revenue should grow 4.7% per year over the next three years. The rest of the industry, on the other hand, is projected to grow by 9.7% annually, which is significantly more attractive.
This information helps explain why AMC Entertainment Holdings is trading at a lower P/S than its industry. Apparently, many shareholders didn't feel comfortable holding on to the company at the risk of losing its future prosperity.
AMC Entertainment Holdings P/S Conclusion
AMC Entertainment Holdings' recent stock slump has resulted in lower profits than other entertainment companies. Price-to-sales ratios shouldn't be a deciding factor in whether or not to buy a stock, but it is a very useful barometer of earnings expectations.
As expected, AMC Entertainment Holdings has maintained a low P/S due to its weaker growth forecast than the industry as a whole. For now, shareholders have accepted that future earnings probably won't bring pleasant surprises, so they're accepting the lower earnings return. Unless this situation improves, a barrier to stock prices will continue to form around these levels.
It is also noteworthy that we discovered 4 warning signs for AMC Entertainment Holdings (Two concerns!) Must be considered.
If you're interested in strong companies that are profitable, then you might want to check this out. free A list of interesting companies that trade at low P/E ratios (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 using only unbiased methodologies, and the articles are not intended as financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.