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Twin Disc, Incorporated's (NASDAQ:TWIN) Subdued P/S Might Signal An Opportunity

Simply Wall St · 2d ago

When close to half the companies operating in the Machinery industry in the United States have price-to-sales ratios (or "P/S") above 2.1x, you may consider Twin Disc, Incorporated (NASDAQ:TWIN) as an attractive investment with its 0.7x 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 limited.

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See our latest analysis for Twin Disc

ps-multiple-vs-industry
NasdaqGS:TWIN Price to Sales Ratio vs Industry December 26th 2025

How Has Twin Disc Performed Recently?

With revenue growth that's superior to most other companies of late, Twin Disc has been doing relatively well. One possibility is that the P/S ratio is low because investors think this strong revenue performance might be less impressive moving forward. If not, then existing shareholders have reason to be quite 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 Twin Disc.

Is There Any Revenue Growth Forecasted For Twin Disc?

There's an inherent assumption that a company should underperform the industry for P/S ratios like Twin Disc's to be considered reasonable.

Taking a look back first, we see that the company managed to grow revenues by a handy 14% last year. The latest three year period has also seen an excellent 39% overall rise in revenue, aided somewhat by its short-term performance. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Looking ahead now, revenue is anticipated to climb by 11% during the coming year according to the only analyst following the company. Meanwhile, the rest of the industry is forecast to only expand by 3.7%, which is noticeably less attractive.

With this information, we find it odd that Twin Disc is trading at a P/S lower than the industry. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.

The Bottom Line On Twin Disc'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.

A look at Twin Disc's revenues reveals that, despite glowing future growth forecasts, its P/S is much lower than we'd expect. There could be some major risk factors that are placing downward pressure on the P/S ratio. It appears the market could be anticipating revenue instability, because these conditions should normally provide a boost to the share price.

You should always think about risks. Case in point, we've spotted 2 warning signs for Twin Disc you should be aware of.

It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).