Market Participants Recognise Almonty Industries Inc.'s (TSE:AII) Revenues Pushing Shares 36% Higher

Simply Wall St · 04/14 13:05

Despite an already strong run, Almonty Industries Inc. (TSE:AII) shares have been powering on, with a gain of 36% in the last thirty days. The last month tops off a massive increase of 244% in the last year.

Since its price has surged higher, Almonty Industries' price-to-sales (or "P/S") ratio of 20.4x might make it look like a strong sell right now compared to other companies in the Metals and Mining industry in Canada, where around half of the companies have P/S ratios below 3.4x and even P/S below 1.3x are quite common. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so lofty.

We've discovered 3 warning signs about Almonty Industries. View them for free.

View our latest analysis for Almonty Industries

ps-multiple-vs-industry
TSX:AII Price to Sales Ratio vs Industry April 14th 2025

What Does Almonty Industries' P/S Mean For Shareholders?

Recent times have been advantageous for Almonty Industries as its revenues have been rising faster than most other companies. It seems that many are expecting the strong revenue performance to persist, which has raised the P/S. However, if this isn't the case, investors might get caught out paying too much for the stock.

Keen to find out how analysts think Almonty Industries' future stacks up against the industry? In that case, our free report is a great place to start.

Do Revenue Forecasts Match The High P/S Ratio?

There's an inherent assumption that a company should far outperform the industry for P/S ratios like Almonty Industries' to be considered reasonable.

Retrospectively, the last year delivered an exceptional 28% gain to the company's top line. The latest three year period has also seen an excellent 38% 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 two analysts covering the company suggest revenue should grow by 134% per year over the next three years. With the industry only predicted to deliver 56% per annum, the company is positioned for a stronger revenue result.

With this in mind, it's not hard to understand why Almonty Industries' P/S is high relative to its industry peers. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

What Does Almonty Industries' P/S Mean For Investors?

The strong share price surge has lead to Almonty Industries' P/S soaring as well. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

Our look into Almonty Industries shows that its P/S ratio remains high on the merit of its strong future revenues. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. Unless these conditions change, they will continue to provide strong support to the share price.

Before you settle on your opinion, we've discovered 3 warning signs for Almonty Industries (2 are potentially serious!) that you should be aware of.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).