What Brimag Digital Age Ltd.'s (TLV:BRMG) 25% Share Price Gain Is Not Telling You

Simply Wall St · 07/05 06:21

The Brimag Digital Age Ltd. (TLV:BRMG) share price has done very well over the last month, posting an excellent gain of 25%. The last month tops off a massive increase of 139% in the last year.

In spite of the firm bounce in price, you could still be forgiven for feeling indifferent about Brimag Digital Age's P/S ratio of 0.6x, since the median price-to-sales (or "P/S") ratio for the Retail Distributors industry in Israel is also close to 0.8x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

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See our latest analysis for Brimag Digital Age

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

How Brimag Digital Age Has Been Performing

For example, consider that Brimag Digital Age's financial performance has been poor lately as its revenue has been in decline. It might be that many expect the company to put the disappointing revenue performance behind them over the coming period, which has kept the P/S from falling. If not, then existing shareholders may 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 Brimag Digital Age will help you shine a light on its historical performance.

How Is Brimag Digital Age's Revenue Growth Trending?

There's an inherent assumption that a company should be matching the industry for P/S ratios like Brimag Digital Age's to be considered reasonable.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 3.4%. As a result, revenue from three years ago have also fallen 21% overall. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

Weighing that medium-term revenue trajectory against the broader industry's one-year forecast for expansion of 19% shows it's an unpleasant look.

With this in mind, we find it worrying that Brimag Digital Age's P/S exceeds that of its industry peers. It seems most investors are ignoring the recent poor growth rate and are hoping for a turnaround in the company's business prospects. There's a good chance existing shareholders are setting themselves up for future disappointment if the P/S falls to levels more in line with the recent negative growth rates.

The Key Takeaway

Brimag Digital Age appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry 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.

We find it unexpected that Brimag Digital Age trades at a P/S ratio that is comparable to the rest of the industry, despite experiencing declining revenues during the medium-term, while the industry as a whole is expected to grow. When we see revenue heading backwards in the context of growing industry forecasts, it'd make sense to expect a possible share price decline on the horizon, sending the moderate P/S lower. Unless the the circumstances surrounding the recent medium-term improve, it wouldn't be wrong to expect a a difficult period ahead for the company's shareholders.

Don't forget that there may be other risks. For instance, we've identified 4 warning signs for Brimag Digital Age (2 are potentially serious) you should be aware of.

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