WEBULL

Revenues Not Telling The Story For Wel-Dish.Incorporated (TSE:2901)

Simply Wall St · 1d ago

When you see that almost half of the companies in the Food industry in Japan have price-to-sales ratios (or "P/S") below 0.6x, Wel-Dish.Incorporated (TSE:2901) looks to be giving off strong sell signals with its 4.5x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so lofty.

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Check out our latest analysis for Wel-Dish.Incorporated

ps-multiple-vs-industry
TSE:2901 Price to Sales Ratio vs Industry December 4th 2025

What Does Wel-Dish.Incorporated's P/S Mean For Shareholders?

Revenue has risen at a steady rate over the last year for Wel-Dish.Incorporated, which is generally not a bad outcome. Perhaps the market believes the recent revenue performance is strong enough to outperform the industry, which has inflated the P/S ratio. However, if this isn't the case, investors might get caught out paying too much for the stock.

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 Wel-Dish.Incorporated's earnings, revenue and cash flow.

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

The only time you'd be truly comfortable seeing a P/S as steep as Wel-Dish.Incorporated's is when the company's growth is on track to outshine the industry decidedly.

Taking a look back first, we see that the company managed to grow revenues by a handy 4.3% last year. However, this wasn't enough as the latest three year period has seen an unpleasant 6.8% overall drop in revenue. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

Weighing that medium-term revenue trajectory against the broader industry's one-year forecast for expansion of 4.1% shows it's an unpleasant look.

In light of this, it's alarming that Wel-Dish.Incorporated's P/S sits above the majority of other companies. Apparently many investors in the company are way more bullish than recent times would indicate and aren't willing to let go of their stock at any price. Only the boldest would assume these prices are sustainable as a continuation of recent revenue trends is likely to weigh heavily on the share price eventually.

What We Can Learn From Wel-Dish.Incorporated's P/S?

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.

Our examination of Wel-Dish.Incorporated revealed its shrinking revenue over the medium-term isn't resulting in a P/S as low as we expected, given the industry is set to grow. When we see revenue heading backwards and underperforming the industry forecasts, we feel the possibility of the share price declining is very real, bringing the P/S back into the realm of reasonability. 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.

You always need to take note of risks, for example - Wel-Dish.Incorporated has 4 warning signs we think you should be aware of.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.