Investors Disappointed by Australis Oil & Gas Limited’s (ASX:ATS) Revenue Performance, Shares Plunge 31%

Australis Oil & Gas Limited (ASX:ATS) shares have retraced a considerable 31% in the last month, reversing a fair amount of their solid recent performance. To make matters worse, the recent drop has wiped out a year’s worth of gains with the share price now back where it started a year ago.

After such a large drop in price, Australis Oil & Gas’ price-to-sales (or “P/S”) ratio of 0.5x might make it look like a strong buy right now compared to the wider Oil and Gas industry in Australia, where around half of the companies have P/S ratios above 8.7x and even P/S above 104x are quite common. Nonetheless, we’d need to dig a little deeper to determine if there is a rational basis for the highly reduced P/S.

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View our latest analysis for Australis Oil & Gas

ASX:ATS Price to Sales Ratio vs Industry September 20th 2025

What Does Australis Oil & Gas’ Recent Performance Look Like?

As an illustration, revenue has deteriorated at Australis Oil & Gas over the last year, which is not ideal at all. It might be that many expect the disappointing revenue performance to continue or accelerate, which has repressed the P/S. However, if this doesn’t eventuate 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 Australis Oil & Gas will help you shine a light on its historical performance.

Is There Any Revenue Growth Forecasted For Australis Oil & Gas?

In order to justify its P/S ratio, Australis Oil & Gas would need to produce anemic growth that’s substantially trailing the industry.

In reviewing the last year of financials, we were disheartened to see the company’s revenues fell to the tune of 18%. The last three years don’t look nice either as the company has shrunk revenue by 37% in aggregate. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

Comparing that to the industry, which is predicted to deliver 5,737% growth in the next 12 months, the company’s downward momentum based on recent medium-term revenue results is a sobering picture.

With this information, we are not surprised that Australis Oil & Gas is trading at a P/S lower than the industry. Nonetheless, there’s no guarantee the P/S has reached a floor yet with revenue going in reverse. There’s potential for the P/S to fall to even lower levels if the company doesn’t improve its top-line growth.

What We Can Learn From Australis Oil & Gas’ P/S?

Australis Oil & Gas’ P/S looks about as weak as its stock price lately. Typically, we’d caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

As we suspected, our examination of Australis Oil & Gas revealed its shrinking revenue over the medium-term is contributing to its low P/S, given the industry is set to grow. At this stage investors feel the potential for an improvement in revenue isn’t great enough to justify a higher P/S ratio. Unless the recent medium-term conditions improve, they will continue to form a barrier for the share price around these levels.

We don’t want to rain on the parade too much, but we did also find 2 warning signs for Australis Oil & Gas that you need to be mindful of.

Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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