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What Village Farms International, Inc.'s (NASDAQ:VFF) 28% Share Price Gain Is Not Telling You

Simply Wall St · 07/13 12:15

Village Farms International, Inc. (NASDAQ:VFF) shares have continued their recent momentum with a 28% gain in the last month alone. Looking back a bit further, it's encouraging to see the stock is up 27% in the last year.

Although its price has surged higher, you could still be forgiven for feeling indifferent about Village Farms International's P/S ratio of 0.5x, since the median price-to-sales (or "P/S") ratio for the Food industry in the United States is also close to 0.9x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

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See our latest analysis for Village Farms International

ps-multiple-vs-industry
NasdaqCM:VFF Price to Sales Ratio vs Industry July 13th 2025

What Does Village Farms International's P/S Mean For Shareholders?

Recent times have been advantageous for Village Farms International as its revenues have been rising faster than most other companies. One possibility is that the P/S ratio is moderate because investors think this strong revenue performance might be about to tail off. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Village Farms International.

Do Revenue Forecasts Match The P/S Ratio?

Village Farms International's P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.

Retrospectively, the last year delivered a decent 12% gain to the company's revenues. Revenue has also lifted 17% in aggregate from three years ago, partly thanks to the last 12 months of growth. Accordingly, shareholders would have probably been satisfied with the medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to slump, contracting by 12% per year during the coming three years according to the two analysts following the company. With the industry predicted to deliver 2.8% growth each year, that's a disappointing outcome.

In light of this, it's somewhat alarming that Village Farms International's P/S sits in line with the majority of other companies. Apparently many investors in the company reject the analyst cohort's pessimism and aren't willing to let go of their stock right now. Only the boldest would assume these prices are sustainable as these declining revenues are likely to weigh on the share price eventually.

What Does Village Farms International's P/S Mean For Investors?

Its shares have lifted substantially and now Village Farms International's P/S is back within range of the industry median. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

While Village Farms International's P/S isn't anything out of the ordinary for companies in the industry, we didn't expect it given forecasts of revenue decline. When we see a gloomy outlook like this, our immediate thoughts are that the share price is at risk of declining, negatively impacting P/S. If the poor revenue outlook tells us one thing, it's that these current price levels could be unsustainable.

You always need to take note of risks, for example - Village Farms International has 2 warning signs we think you should be aware of.

If you're unsure about the strength of Village Farms International's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.