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The price is for Zeta Global Holdings Corp. (NYSE:ZETA) Fair Even After a 25% Drop

Zeta Global Holdings Corp. (NYSE:ZETA) shareholders waiting for something to happen suffered a setback last month when the share price fell 25%. Of course, many would still like to own shares in the longer term, with the share price up 135% in the last twelve months.

Despite the sharp drop in price, it is still not an exaggeration to say that Zeta Global Holdings’ price-to-sales ratio (or “P/S”), currently 5.3, is more “in the middle” compared to the software industry in the United States, where the median P/S ratio is around 5.5 However, it is not advisable to simply ignore the P/E ratio without explanation, as investors may be ignoring a clear opportunity or a costly mistake.

Check out our latest analysis for Zeta Global Holdings

ps-multiple-vs-industry
NYSE:ZETA price to sales ratio compared to industry, November 27, 2024

How Zeta Global Holdings performed

Recent times have been favorable for Zeta Global Holdings as the company’s revenues have increased faster than most other companies. One possibility is that the price-to-earnings ratio is moderate as investors believe this strong sales performance may soon fade. If not, existing shareholders have reason to be optimistic about the future direction of the share price.

If you want to see what analysts are predicting for the future, you should check out our free Report on Zeta Global Holdings.

Is Zeta Global Holdings forecast to see some revenue growth?

Zeta Global Holdings’ P/E ratio would be typical of a company that is expected to experience only moderate growth and, more importantly, perform in line with the industry.

If we review the last year of revenue growth, the company posted a whopping increase of 30%. Strong recent performance has also seen the company grow overall revenue by 106% over the past three years. Therefore, it’s fair to say that the company’s revenue growth has been excellent recently.

As for the outlook, analysts covering the company expect it to generate growth of 20% per year over the next three years. Meanwhile, the rest of the industry is forecast to grow at 21% per year, which isn’t significantly different.

With this in mind, it makes sense that Zeta Global Holdings’ P/S is broadly in line with its industry peers. Apparently, most investors expect average future growth and are only willing to pay a moderate amount for the stock.

The bottom line on Zeta Global Holdings’ P/E ratio

Zeta Global Holdings’ falling share price has brought its price-to-earnings (P/E) ratio back into a similar range to the rest of the industry. It doesn’t make sense to use the price-to-sales ratio alone to determine whether you should sell your shares, but it can be a practical guide to the company’s future prospects.

Our look at Zeta Global Holdings’ revenue growth estimates shows that the P/E ratio is roughly in line with our expectations, with both metrics closely tracking industry averages. Currently, shareholders are happy with the P/E ratio as they are fairly confident that there will be no surprises in future sales. All in all, unless there are major shocks in the P/E and revenue estimates, it’s hard to imagine the stock price moving much in one direction or the other in the near future.

Before you take the next step, you should be clear about this 2 warning signs for Zeta Global Holdings that we uncovered.

If companies with a history of solid earnings growth are right for youmaybe you would like to see this free Collection of other companies with strong earnings growth and low P/E ratios.

Valuation is complex, but we are here to simplify it.

Discover whether Zeta Global Holdings may be undervalued or overvalued with our detailed analysis Fair value estimates, potential risks, dividends, insider trading and its financial condition.

Access the free analysis

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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term focused analysis based on fundamental data. Note that our analysis may not reflect the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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