WEBULL

There's No Escaping Lerøy Seafood Group ASA's (OB:LSG) Muted Revenues

Simply Wall St · 07/11 04:26

When you see that almost half of the companies in the Food industry in Norway have price-to-sales ratios (or "P/S") above 2.3x, Lerøy Seafood Group ASA (OB:LSG) looks to be giving off some buy signals with its 0.8x P/S ratio. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

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Check out our latest analysis for Lerøy Seafood Group

ps-multiple-vs-industry
OB:LSG Price to Sales Ratio vs Industry July 11th 2025

What Does Lerøy Seafood Group's P/S Mean For Shareholders?

With revenue growth that's superior to most other companies of late, Lerøy Seafood Group has been doing relatively well. It might be that many expect the strong revenue performance to degrade substantially, which has repressed the share price, and thus the P/S ratio. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

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

What Are Revenue Growth Metrics Telling Us About The Low P/S?

In order to justify its P/S ratio, Lerøy Seafood Group would need to produce sluggish growth that's trailing the industry.

Taking a look back first, we see that the company managed to grow revenues by a handy 3.1% last year. This was backed up an excellent period prior to see revenue up by 35% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Shifting to the future, estimates from the seven analysts covering the company suggest revenue should grow by 7.8% per annum over the next three years. Meanwhile, the rest of the industry is forecast to expand by 354% each year, which is noticeably more attractive.

With this in consideration, its clear as to why Lerøy Seafood Group's P/S is falling short industry peers. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.

The Final Word

It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

As we suspected, our examination of Lerøy Seafood Group's analyst forecasts revealed that its inferior revenue outlook is contributing to its low P/S. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. The company will need a change of fortune to justify the P/S rising higher in the future.

Plus, you should also learn about this 1 warning sign we've spotted with Lerøy Seafood Group.

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).