Ocado Group share price surges despite tough year for revenues
Ocado Group plc has given its investors something to smile about this month. The Ocado Group share price has jumped by around 34% in a matter of weeks, recovering ground after months of uncertainty. But anyone who has held shares for a little longer will know it’s not been smooth sailing, as the stock still sits roughly 18% lower than it did this time last year.
The surge has prompted a lot of chat in City circles about whether the valuation can be justified. With almost half of companies in the UK’s consumer retail sector trading on price-to-sales (P/S) ratios below 0.5x, Ocado’s 2x P/S ratio stands out. It would usually be a red flag, but there are reasons some investors remain optimistic. Analysts following the business expect a return to revenue growth that could outpace the wider industry in the coming years.
On the face of it, Ocado’s recent results haven’t inspired confidence. Revenue has fallen more than 50% compared with the previous year, and the company’s top line is down by nearly half over the past three years. That performance has left many investors wondering if this tech‑driven retailer, known for its online grocery partnerships, can deliver on its promises. Yet the current share price suggests many shareholders believe the worst may be behind it.
City analysts are forecasting something of a turnaround. Expectations point to annual revenue growth of around 49% over the next three years, a far stronger figure than the 7% average predicted across the broader sector. That prospect alone may explain why many are hanging on to their stock, anticipating that the Ocado Group share price has further to climb if those forecasts are met.
It’s also worth noting that a higher P/S ratio doesn’t automatically mean a company is overvalued. It often reflects a bet on future performance rather than a snapshot of the present. For Ocado, which has spent heavily on building robotic warehouse technology and expanding internationally, the valuation is a signal that investors are prepared to wait for returns.
If you want to dig deeper into company data, you can find more details on Ocado Group’s profile via the London Stock Exchange.
For more updates on UK‑listed companies and wider financial news, explore our Business & Finance section at EyeOnLondon and join the discussion below. We’d love to hear your views on Ocado’s recent rise.
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