WEBULL

Martello Technologies Group Inc.'s (CVE:MTLO) Price Is Right But Growth Is Lacking After Shares Rocket 50%

Simply Wall St · 06/14 12:35

Martello Technologies Group Inc. (CVE:MTLO) shares have had a really impressive month, gaining 50% after a shaky period beforehand. While recent buyers may be laughing, long-term holders might not be as pleased since the recent gain only brings the stock back to where it started a year ago.

In spite of the firm bounce in price, Martello Technologies Group's price-to-sales (or "P/S") ratio of 0.6x might still make it look like a buy right now compared to the IT industry in Canada, where around half of the companies have P/S ratios above 1.3x and even P/S above 4x 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 limited.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

See our latest analysis for Martello Technologies Group

ps-multiple-vs-industry
TSXV:MTLO Price to Sales Ratio vs Industry June 14th 2025

How Has Martello Technologies Group Performed Recently?

For example, consider that Martello Technologies Group's financial performance has been poor lately as its revenue has been in decline. It might be that many expect the disappointing revenue performance to continue or accelerate, which has repressed the P/S. However, if this doesn't eventuate then existing shareholders may be feeling optimistic about the future direction of the share price.

We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Martello Technologies Group's earnings, revenue and cash flow.

Do Revenue Forecasts Match The Low P/S Ratio?

The only time you'd be truly comfortable seeing a P/S as low as Martello Technologies Group's is when the company's growth is on track to lag the industry.

Retrospectively, the last year delivered a frustrating 7.9% 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 17% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.

In contrast to the company, the rest of the industry is expected to grow by 21% over the next year, which really puts the company's recent medium-term revenue decline into perspective.

In light of this, it's understandable that Martello Technologies Group's P/S would sit below the majority of other companies. Nonetheless, there's no guarantee the P/S has reached a floor yet with revenue going in reverse. Even just maintaining these prices could be difficult to achieve as recent revenue trends are already weighing down the shares.

The Final Word

Martello Technologies Group's stock price has surged recently, but its but its P/S still remains modest. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

As we suspected, our examination of Martello Technologies Group revealed its shrinking revenue over the medium-term is contributing to its low P/S, given the industry is set to grow. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises either. If recent medium-term revenue trends continue, it's hard to see the share price moving strongly in either direction in the near future under these circumstances.

There are also other vital risk factors to consider before investing and we've discovered 4 warning signs for Martello Technologies Group that you should be aware of.

If these risks are making you reconsider your opinion on Martello Technologies Group, explore our interactive list of high quality stocks to get an idea of what else is out there.