Not Many Are Piling Into De.mem Limited (ASX:DEM) Just Yet

Simply Wall St.11-05

De.mem Limited's (ASX:DEM) price-to-sales (or "P/S") ratio of 1.2x may look like a pretty appealing investment opportunity when you consider close to half the companies in the Water Utilities industry...

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Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.    Trump has pledged to \"unleash\" American oil and gas and these 15 US stocks have developments that are poised to benefit.  Check out our latest analysis for De.mem ASX:DEM Price to Sales Ratio vs Industry November 4th 2025Advertisement How Has De.mem Performed Recently?  The revenue growth achieved at De.mem over the last year would be more than acceptable for most companies.   Perhaps the market is expecting this acceptable revenue performance to take a dive, which has kept the P/S suppressed.  Those who are bullish on De.mem will be hoping that this isn't the case, so that they can pick up the stock at a lower valuation.     Although there are no analyst estimates available for De.mem, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.   What Are Revenue Growth Metrics Telling Us About The Low P/S?   In order to justify its P/S ratio, De.mem would need to produce sluggish growth that's trailing the industry.   Taking a look back first, we see that the company managed to grow revenues by a handy 12% last year.   This was backed up an excellent period prior to see revenue up by 50% in total over the last three years.  Therefore, it's fair to say the revenue growth recently has been superb for the company.     This is in contrast to the rest of the industry, which is expected to grow by 3.2% over the next year, materially lower than the company's recent medium-term annualised growth rates.  With this in mind, we find it intriguing that De.mem's P/S isn't as high compared to that of its industry peers.  Apparently some shareholders believe the recent performance has exceeded its limits and have been accepting significantly lower selling prices.    What We Can Learn From De.mem's P/S?  We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.  We're very surprised to see De.mem currently trading on a much lower than expected P/S since its recent three-year growth is higher than the wider industry forecast.  When we see strong revenue with faster-than-industry growth, we assume there are some significant underlying risks to the company's ability to make money which is applying downwards pressure on the P/S ratio.  It appears many are indeed anticipating revenue instability, because the persistence of these recent medium-term conditions would normally provide a boost to the share price.      Don't forget that there may be other risks. For instance, we've identified   1 warning sign for De.mem  that you should be aware of.   If you're unsure about the strength of De.mem's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed. New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave 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":0,"need_auth":false,"code":"91000000","status":"200"},"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":"4.35.12","shortVersion":"4.35.12","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/2581978714","isCrawlerRequest":true}