With Helix Energy Solutions Group, Inc. (NYSE:HLX) It Looks Like You'll Get What You Pay For

Helix Energy Solutions Group, Inc. -1.78%

Helix Energy Solutions Group, Inc.

HLX

11.60

-1.78%

It's not a stretch to say that Helix Energy Solutions Group, Inc.'s (NYSE:HLX) price-to-sales (or "P/S") ratio of 1.3x right now seems quite "middle-of-the-road" for companies in the Energy Services industry in the United States, where the median P/S ratio is around 0.9x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

View our latest analysis for Helix Energy Solutions Group

ps-multiple-vs-industry
NYSE:HLX Price to Sales Ratio vs Industry December 29th 2023

How Has Helix Energy Solutions Group Performed Recently?

With revenue growth that's superior to most other companies of late, Helix Energy Solutions Group has been doing relatively well. One possibility is that the P/S ratio is moderate because investors think this strong revenue performance might be about to tail off. If the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Helix Energy Solutions Group.

How Is Helix Energy Solutions Group's Revenue Growth Trending?

In order to justify its P/S ratio, Helix Energy Solutions Group would need to produce growth that's similar to the industry.

If we review the last year of revenue growth, the company posted a terrific increase of 65%. The latest three year period has also seen an excellent 67% overall rise in revenue, aided by its short-term performance. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Shifting to the future, estimates from the four analysts covering the company suggest revenue should grow by 7.8% each year over the next three years. Meanwhile, the rest of the industry is forecast to expand by 9.6% each year, which is not materially different.

In light of this, it's understandable that Helix Energy Solutions Group's P/S sits in line with the majority of other companies. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

The Key Takeaway

While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

Our look at Helix Energy Solutions Group's revenue growth estimates show that its P/S is about what we expect, as both metrics follow closely with the industry averages. At this stage investors feel the potential for an improvement or deterioration in revenue isn't great enough to push P/S in a higher or lower direction. Unless these conditions change, they will continue to support the share price at these levels.

There are also other vital risk factors to consider before investing and we've discovered 1 warning sign for Helix Energy Solutions Group 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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