Whole Earth Brands, Inc.（纳斯达克股票代码：FREE）股价在反弹31％后可能带来价格风险

The Whole Earth Brands, Inc. (NASDAQ:FREE) share price has done very well over the last month, posting an excellent gain of 31%. Looking back a bit further, it's encouraging to see the stock is up 32% in the last year.

Even after such a large jump in price, you could still be forgiven for feeling indifferent about Whole Earth Brands' P/S ratio of 0.4x, since the median price-to-sales (or "P/S") ratio for the Food industry in the United States is also close to 0.8x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

What Does Whole Earth Brands' Recent Performance Look Like?

With revenue growth that's inferior to most other companies of late, Whole Earth Brands has been relatively sluggish. One possibility is that the P/S ratio is moderate because investors think this lacklustre revenue performance will turn around. You'd really hope so, otherwise you're paying a relatively elevated price for a company with this sort of growth profile.

Keen to find out how analysts think Whole Earth Brands' future stacks up against the industry? In that case, our free report is a great place to start.

How Is Whole Earth Brands' Revenue Growth Trending?

The only time you'd be comfortable seeing a P/S like Whole Earth Brands' is when the company's growth is tracking the industry closely.

If we review the last year of revenue, the company posted a result that saw barely any deviation from a year ago. However, a few strong years before that means that it was still able to grow revenue by an impressive 101% in total over the last three years. Accordingly, shareholders will be pleased, but also have some questions to ponder about the last 12 months.

Looking ahead now, revenue is anticipated to climb by 5.7% per year during the coming three years according to the three analysts following the company. With the industry only predicted to deliver 2.7% each year, the company is positioned for a stronger revenue result.

With this in consideration, we find it intriguing that Whole Earth Brands' P/S is closely matching its industry peers. It may be that most investors aren't convinced the company can achieve future growth expectations.

The Key Takeaway

Whole Earth Brands' stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. 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.

Despite enticing revenue growth figures that outpace the industry, Whole Earth Brands' P/S isn't quite what we'd expect. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. This uncertainty seems to be reflected in the share price which, while stable, could be higher given the revenue forecasts.

Having said that, be aware Whole Earth Brands is showing 2 warning signs in our investment analysis, you should know about.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

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