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Highlights
- WiseTech Global (WTC) shares jump 27% in a month
- Revenue growth trails industry expectations
- High P/S ratio raises valuation concerns
WiseTech Global (ASX:WTC) has seen a sharp rebound in its share price, climbing 27% in just the past month. While this recovery may offer some relief to existing shareholders, the overall picture remains mixed when looking at the company's fundamentals and long-term prospects. Despite the recent bounce, WiseTech Global’s 12-month return stands at a modest 3%, lagging behind many of its tech peers on the ASX200 index.
The most prominent metric drawing attention is the company’s price-to-sales (P/S) ratio, which currently sits at an elevated 29.1x. This is significantly higher than the Australian software industry average, where many companies maintain P/S ratios below 3.3x — and some even under 1.2x. Such a premium typically suggests strong expectations for future growth, but that optimism is not fully supported by WiseTech’s recent financial performance.
Over the past year, WiseTech reported revenue growth of 12%, a figure that trails the broader industry. Even though the company posted a cumulative 75% revenue increase over the past three years, the growth pace appears to be losing momentum. Analyst forecasts indicate revenue is expected to grow by 27% annually over the next three years. However, that is still behind the industry expectation of 41% annual growth during the same period.
This discrepancy raises concerns about whether WiseTech’s lofty valuation can be sustained. While high valuations are not unusual in the tech sector, they typically come with strong growth projections to justify the premium. In this case, the revenue outlook does not appear robust enough to support such a high P/S ratio, especially when compared with other stocks on the ASX dividend stocks list, which may offer more balanced value and income potential.
The recent share price momentum could be driven by broader market optimism or speculation about a potential business turnaround. However, unless WiseTech can deliver stronger revenue growth to match or exceed industry benchmarks, its valuation could come under pressure.
Investors and market watchers keeping an eye on the ASX200 may find WiseTech’s situation worth monitoring, especially given its influence on the tech segment of the index. As it stands, the stock’s current price levels reflect high expectations, and only time will reveal whether the business performance can catch up.
