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Why Investors Shouldn't Be Surprised By Atlas Engineered Products Ltd.'s (CVE:AEP) 29% Share Price Surge

Simply Wall St · 01/03 12:21

Atlas Engineered Products Ltd. (CVE:AEP) shareholders are no doubt pleased to see that the share price has bounced 29% in the last month, although it is still struggling to make up recently lost ground. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 41% in the last twelve months.

Following the firm bounce in price, when almost half of the companies in Canada's Forestry industry have price-to-sales ratios (or "P/S") below 0.3x, you may consider Atlas Engineered Products as a stock probably not worth researching with its 0.9x 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 as high as it is.

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View our latest analysis for Atlas Engineered Products

ps-multiple-vs-industry
TSXV:AEP Price to Sales Ratio vs Industry January 3rd 2026

How Atlas Engineered Products Has Been Performing

Atlas Engineered Products certainly has been doing a good job lately as its revenue growth has been positive while most other companies have been seeing their revenue go backwards. Perhaps the market is expecting the company's future revenue growth to buck the trend of the industry, contributing to a higher P/S. If not, then existing shareholders might be a little nervous about the viability of the share price.

Want the full picture on analyst estimates for the company? Then our free report on Atlas Engineered Products will help you uncover what's on the horizon.

How Is Atlas Engineered Products' Revenue Growth Trending?

In order to justify its P/S ratio, Atlas Engineered Products would need to produce impressive growth in excess of the industry.

Taking a look back first, we see that the company managed to grow revenues by a handy 9.3% last year. Still, lamentably revenue has fallen 1.2% in aggregate from three years ago, which is disappointing. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.

Turning to the outlook, the next year should generate growth of 17% as estimated by the five analysts watching the company. With the industry only predicted to deliver 4.3%, the company is positioned for a stronger revenue result.

With this in mind, it's not hard to understand why Atlas Engineered Products' P/S is high relative to its industry peers. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Bottom Line On Atlas Engineered Products' P/S

The large bounce in Atlas Engineered Products' shares has lifted the company's P/S handsomely. 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.

Our look into Atlas Engineered Products shows that its P/S ratio remains high on the merit of its strong future revenues. At this stage investors feel the potential for a deterioration in revenues is quite remote, justifying the elevated P/S ratio. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

There are also other vital risk factors to consider and we've discovered 2 warning signs for Atlas Engineered Products (1 is a bit unpleasant!) that you should be aware of before investing here.

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