Worthington Enterprises, Inc.'s (NYSE:WOR) Share Price Not Quite Adding Up

Simply Wall St.12-23 19:47

Worthington Enterprises, Inc.'s (NYSE:WOR) price-to-sales (or "P/S") ratio of 1.8x may not look like an appealing investment opportunity when you consider close to half the companies in the Consumer ...

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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.     View our latest analysis for Worthington Enterprises NYSE:WOR Price to Sales Ratio vs Industry December 23rd 2024 What Does Worthington Enterprises' P/S Mean For Shareholders?  Worthington Enterprises hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average.   Perhaps the market is expecting the poor revenue to reverse, justifying it's current high P/S..  You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.     If you'd like to see what analysts are forecasting going forward, you should check out our free report on Worthington Enterprises.  Is There Enough Revenue Growth Forecasted For Worthington Enterprises?   Worthington Enterprises' P/S ratio would be typical for a company that's expected to deliver solid growth, and importantly, perform better than the industry.   Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 76%.   The last three years don't look nice either as the company has shrunk revenue by 71% in aggregate.  So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.     Looking ahead now, revenue is anticipated to slump, contracting by 1.7% during the coming year according to the four analysts following the company.  That's not great when the rest of the industry is expected to grow by 5.2%.  With this information, we find it concerning that Worthington Enterprises is trading at a P/S higher than the industry.  Apparently many investors in the company reject the analyst cohort's pessimism and aren't willing to let go of their stock at any price.  Only the boldest would assume these prices are sustainable as these declining revenues are likely to weigh heavily on the share price eventually.    What We Can Learn From Worthington Enterprises' P/S?  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.  Our examination of Worthington Enterprises' analyst forecasts revealed that its shrinking revenue outlook isn't drawing down its high P/S anywhere near as much as we would have predicted.  In cases like this where we see revenue decline on the horizon, we suspect the share price is at risk of following suit, bringing back the high P/S into the realms of suitability.  Unless these conditions improve markedly, it'll be a challenging time for shareholders.     And what about other risks? Every company has them, and we've spotted   2 warning signs for Worthington Enterprises   you should know about.    If these risks are making you reconsider your opinion on Worthington Enterprises, explore our interactive list of high quality stocks to get an idea of what else is out there. Valuation is complex, but we're here to simplify it.Discover if Worthington Enterprises might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.Access Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2493760984"}