Pantoro Gold Limited (ASX:PNR) shareholders have had their patience rewarded with a 26% share price jump in the last month. The last month tops off a massive increase of 175% in the last year.

Although its price has surged higher, Pantoro Gold may still be sending very bullish signals at the moment with its price-to-sales (or "P/S") ratio of 5.3x, since almost half of all companies in the Metals and Mining industry in Australia have P/S ratios greater than 68.5x and even P/S higher than 532x are not unusual. However, the P/S might be quite low for a reason and it requires further investigation to determine if it's justified.

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View our latest analysis for Pantoro Gold

How Has Pantoro Gold Performed Recently?

With revenue growth that's inferior to most other companies of late, Pantoro Gold has been relatively sluggish. The P/S ratio is probably low because investors think this lacklustre revenue performance isn't going to get any better. If you still like the company, you'd be hoping revenue doesn't get any worse and that you could pick up some stock while it's out of favour.

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

Is There Any Revenue Growth Forecasted For Pantoro Gold?

There's an inherent assumption that a company should far underperform the industry for P/S ratios like Pantoro Gold's to be considered reasonable.

Retrospectively, the last year delivered an exceptional 97% gain to the company's top line. Pleasingly, revenue has also lifted 241% in aggregate from three years ago, thanks to the last 12 months of growth. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Turning to the outlook, the next year should generate growth of 51% as estimated by the five analysts watching the company. Meanwhile, the rest of the industry is forecast to expand by 145%, which is noticeably more attractive.

With this information, we can see why Pantoro Gold is trading at a P/S lower than the industry. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.

What Does Pantoro Gold's P/S Mean For Investors?

Even after such a strong price move, Pantoro Gold's P/S still trails 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.

We've established that Pantoro Gold maintains its low P/S on the weakness of its forecast growth being lower than the wider industry, as expected. Shareholders' pessimism on the revenue prospects for the company seems to be the main contributor to the depressed P/S. The company will need a change of fortune to justify the P/S rising higher in the future.

Many other vital risk factors can be found on the company's balance sheet. You can assess many of the main risks through our free balance sheet analysis for Pantoro Gold with six simple checks.

It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).

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