Slammed 30% Reliance Global Group, Inc. (NASDAQ:RELI) Screens Well Here But There Might Be A Catch

Simply Wall St · 04/11 10:39

To the annoyance of some shareholders, Reliance Global Group, Inc. (NASDAQ:RELI) shares are down a considerable 30% in the last month, which continues a horrid run for the company. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 83% loss during that time.

After such a large drop in price, considering around half the companies operating in the United States' Insurance industry have price-to-sales ratios (or "P/S") above 1.1x, you may consider Reliance Global Group as an solid investment opportunity with its 0.2x 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.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Check out our latest analysis for Reliance Global Group

ps-multiple-vs-industry
NasdaqCM:RELI Price to Sales Ratio vs Industry April 11th 2025

How Has Reliance Global Group Performed Recently?

We'd have to say that with no tangible growth over the last year, Reliance Global Group's revenue has been unimpressive. It might be that many expect the uninspiring revenue performance to worsen, which has repressed the P/S. If not, then existing shareholders may be feeling optimistic about the future direction of the share price.

Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Reliance Global Group will help you shine a light on its historical performance.

Is There Any Revenue Growth Forecasted For Reliance Global Group?

The only time you'd be truly comfortable seeing a P/S as low as Reliance Global Group's is when the company's growth is on track to lag the industry.

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 45% in total over the last three years. Accordingly, shareholders will be pleased, but also have some questions to ponder about the last 12 months.

Comparing that to the industry, which is only predicted to deliver 4.8% growth in the next 12 months, the company's momentum is stronger based on recent medium-term annualised revenue results.

With this in mind, we find it intriguing that Reliance Global Group'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 Does Reliance Global Group's P/S Mean For Investors?

Reliance Global Group's recently weak share price has pulled its P/S back below other Insurance companies. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

Our examination of Reliance Global Group revealed its three-year revenue trends aren't boosting its P/S anywhere near as much as we would have predicted, given they look better than current industry expectations. When we see robust revenue growth that outpaces the industry, we presume that there are notable underlying risks to the company's future performance, which is exerting downward pressure on the P/S ratio. At least price risks look to be very low if recent medium-term revenue trends continue, but investors seem to think future revenue could see a lot of volatility.

It is also worth noting that we have found 4 warning signs for Reliance Global Group that you need to take into consideration.

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