Why Investors Shouldn't Be Surprised By Sabre Corporation's (NASDAQ:SABR) 30% Share Price Plunge

Simply Wall St · 04/10 10:22

The Sabre Corporation (NASDAQ:SABR) share price has fared very poorly over the last month, falling by a substantial 30%. Longer-term shareholders would now have taken a real hit with the stock declining 6.4% in the last year.

After such a large drop in price, considering around half the companies operating in the United States' Hospitality industry have price-to-sales ratios (or "P/S") above 1.5x, you may consider Sabre as an solid investment opportunity with its 0.3x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

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Check out our latest analysis for Sabre

ps-multiple-vs-industry
NasdaqGS:SABR Price to Sales Ratio vs Industry April 10th 2025

What Does Sabre's Recent Performance Look Like?

Sabre could be doing better as it's been growing revenue less than most other companies lately. It seems that many are expecting the uninspiring revenue performance to persist, which has repressed the growth of the P/S ratio. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Sabre .

What Are Revenue Growth Metrics Telling Us About The Low P/S?

In order to justify its P/S ratio, Sabre would need to produce sluggish growth that's trailing the industry.

If we review the last year of revenue growth, the company posted a worthy increase of 4.2%. The latest three year period has also seen an excellent 79% overall rise in revenue, aided somewhat by its short-term performance. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Shifting to the future, estimates from the eight analysts covering the company suggest revenue should grow by 5.6% per year over the next three years. Meanwhile, the rest of the industry is forecast to expand by 13% each year, which is noticeably more attractive.

With this information, we can see why Sabre 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.

The Bottom Line On Sabre's P/S

Sabre's P/S has taken a dip along with its share price. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

We've established that Sabre maintains its low P/S on the weakness of its forecast growth being lower than the wider industry, as expected. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. The company will need a change of fortune to justify the P/S rising higher in the future.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Sabre (1 is potentially serious!) that you need to be mindful of.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).