Volatus Aerospace Inc. (CVE:FLT) Shares Slammed 26% But Getting In Cheap Might Be Difficult Regardless

Volatus Aerospace Inc. (CVE:FLT) shareholders won’t be pleased to see that the share price has had a very rough month, dropping 26% and undoing the prior period’s positive performance. The good news is that in the last year, the stock has shone bright like a diamond, gaining 183%.

Even after such a large drop in price, when almost half of the companies in Canada’s Airlines industry have price-to-sales ratios (or “P/S”) below 0.6x, you may still consider Volatus Aerospace as a stock not worth researching with its 10.1x 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 so lofty.

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Check out our latest analysis for Volatus Aerospace

How Has Volatus Aerospace Performed Recently?

With revenue growth that’s inferior to most other companies of late, Volatus Aerospace has been relatively sluggish. Perhaps the market is expecting future revenue performance to undergo a reversal of fortunes, which has elevated the P/S ratio. 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 Volatus Aerospace.

Is There Enough Revenue Growth Forecasted For Volatus Aerospace?

In order to justify its P/S ratio, Volatus Aerospace would need to produce outstanding growth that’s well in excess of the industry.

Taking a look back first, we see that the company managed to grow revenues by a handy 9.1% last year. This was backed up an excellent period prior to see revenue up by 32% in total over the last three years. So we can start by confirming that the company has done a great job of growing revenues over that time.

Looking ahead now, revenue is anticipated to climb by 38% per year during the coming three years according to the four analysts following the company. With the industry only predicted to deliver 35% per year, the company is positioned for a stronger revenue result.

In light of this, it’s understandable that Volatus Aerospace’s P/S sits above the majority of other companies. Apparently shareholders aren’t keen to offload something that is potentially eyeing a more prosperous future.

The Bottom Line On Volatus Aerospace’s P/S

A significant share price dive has done very little to deflate Volatus Aerospace’s very lofty 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.

As we suspected, our examination of Volatus Aerospace’s analyst forecasts revealed that its superior revenue outlook is contributing to its high P/S. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren’t under threat. It’s hard to see the share price falling strongly in the near future under these circumstances.

Before you settle on your opinion, we’ve discovered 2 warning signs for Volatus Aerospace (1 doesn’t sit too well with us!) that you should be aware of.

If you’re unsure about the strength of Volatus Aerospace’s business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.