Av-Gad Holdings Ltd's (TLV:AVGD) 26% Jump Shows Its Popularity With Investors

Simply Wall St · 07/05 06:16

Av-Gad Holdings Ltd (TLV:AVGD) shares have continued their recent momentum with a 26% gain in the last month alone. Looking back a bit further, it's encouraging to see the stock is up 99% in the last year.

Since its price has surged higher, you could be forgiven for thinking Av-Gad Holdings is a stock not worth researching with a price-to-sales ratios (or "P/S") of 2.7x, considering almost half the companies in Israel's Consumer Durables industry have P/S ratios below 2.2x. However, the P/S might be high for a reason and it requires further investigation to determine if it's justified.

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 Av-Gad Holdings

ps-multiple-vs-industry
TASE:AVGD Price to Sales Ratio vs Industry July 5th 2025

What Does Av-Gad Holdings' Recent Performance Look Like?

Av-Gad Holdings certainly has been doing a great job lately as it's been growing its revenue at a really rapid pace. The P/S ratio is probably high because investors think this strong revenue growth will be enough to outperform the broader industry in the near future. If not, then existing shareholders might be a little nervous about the viability of the share price.

Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Av-Gad Holdings will help you shine a light on its historical performance.

Is There Enough Revenue Growth Forecasted For Av-Gad Holdings?

There's an inherent assumption that a company should outperform the industry for P/S ratios like Av-Gad Holdings' to be considered reasonable.

Retrospectively, the last year delivered an exceptional 67% gain to the company's top line. Pleasingly, revenue has also lifted 51% in aggregate from three years ago, thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing revenue over that time.

Comparing that to the industry, which is only predicted to deliver 6.6% growth in the next 12 months, the company's momentum is stronger based on recent medium-term annualised revenue results.

With this information, we can see why Av-Gad Holdings is trading at such a high P/S compared to the industry. Presumably shareholders aren't keen to offload something they believe will continue to outmanoeuvre the wider industry.

What Does Av-Gad Holdings' P/S Mean For Investors?

Av-Gad Holdings shares have taken a big step in a northerly direction, but its P/S is elevated as a result. 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.

As we suspected, our examination of Av-Gad Holdings revealed its three-year revenue trends are contributing to its high P/S, given they look better than current industry expectations. At this stage investors feel the potential continued revenue growth in the future is great enough to warrant an inflated P/S. Unless the recent medium-term conditions change, they will continue to provide strong support to the share price.

It's always necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Av-Gad Holdings, and understanding them should be part of your investment process.

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).