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Lacklustre Performance Is Driving European Medical Solutions' (EBR:ALEMS) Low P/S

Simply Wall St · 2d ago

European Medical Solutions' (EBR:ALEMS) price-to-sales (or "P/S") ratio of 0.4x might make it look like a strong buy right now compared to the Biotechs industry in Belgium, where around half of the companies have P/S ratios above 7.1x and even P/S above 29x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly reduced P/S.

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See our latest analysis for European Medical Solutions

ps-multiple-vs-industry
ENXTBR:ALEMS Price to Sales Ratio vs Industry December 23rd 2025

What Does European Medical Solutions' P/S Mean For Shareholders?

European Medical Solutions has been doing a good job lately as it's been growing revenue at a solid pace. It might be that many expect the respectable revenue performance to degrade substantially, which has repressed the P/S. If that doesn't eventuate, then existing shareholders have reason to be optimistic about the future direction of the share price.

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

Do Revenue Forecasts Match The Low P/S Ratio?

European Medical Solutions' P/S ratio would be typical for a company that's expected to deliver very poor growth or even falling revenue, and importantly, perform much worse than the industry.

Taking a look back first, we see that the company managed to grow revenues by a handy 13% last year. However, this wasn't enough as the latest three year period has seen an unpleasant 13% 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 255% shows it's an unpleasant look.

In light of this, it's understandable that European Medical Solutions' P/S would sit below the majority of other companies. However, we think shrinking revenues are unlikely to lead to a stable P/S over the longer term, which could set up shareholders for future disappointment. There's potential for the P/S to fall to even lower levels if the company doesn't improve its top-line growth.

The Bottom Line On European Medical Solutions' P/S

While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

Our examination of European Medical Solutions confirms that the company's shrinking revenue over the past medium-term is a key factor in its low price-to-sales ratio, given the industry is projected to grow. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises either. If recent medium-term revenue trends continue, it's hard to see the share price moving strongly in either direction in the near future under these circumstances.

It's always necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with European Medical Solutions (at least 2 which are a bit concerning), and understanding these should be part of your investment process.

Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.