NextPlat Corp's (NASDAQ:NXPL) Share Price Is Still Matching Investor Opinion Despite 26% Slump
The NextPlat Corp (NASDAQ:NXPL) share price has fared very poorly over the last month, falling by a substantial 26%. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 22% in that time.
Even after such a large drop in price, you could still be forgiven for thinking NextPlat is a stock to steer clear of with a price-to-sales ratios (or "P/S") of 3.2x, considering almost half the companies in the United States' Telecom industry have P/S ratios below 1x. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.
See our latest analysis for NextPlat
What Does NextPlat's Recent Performance Look Like?
The recent revenue growth at NextPlat would have to be considered satisfactory if not spectacular. Perhaps the market believes the recent revenue performance is strong enough to outperform the industry, which has inflated the P/S ratio. However, if this isn't the case, investors might get caught out paying too much for the stock.
We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our
free report on NextPlat's
earnings, revenue and cash flow.
Is There Enough Revenue Growth Forecasted For NextPlat?
The only time you'd be truly comfortable seeing a P/S as steep as NextPlat's is when the company's growth is on track to outshine the industry decidedly.
Retrospectively, the last year delivered a decent 3.0% gain to the company's revenues. The latest three year period has also seen an excellent 90% overall rise in revenue, aided somewhat by its short-term performance. Therefore, it's fair to say the revenue growth recently has been superb for the company.
When compared to the industry's one-year growth forecast of 6.0%, the most recent medium-term revenue trajectory is noticeably more alluring
With this information, we can see why NextPlat is trading at such a high P/S compared to the industry. It seems most investors are expecting this strong growth to continue and are willing to pay more for the stock.
The Key Takeaway
A significant share price dive has done very little to deflate NextPlat's very lofty P/S. 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.
It's no surprise that NextPlat can support its high P/S given the strong revenue growth its experienced over the last three-year is superior to the current industry outlook. At this stage investors feel the potential continued revenue growth in the future is great enough to warrant an inflated P/S. Unless the recent medium-term conditions change, they will continue to provide strong support to the share price.
Before you take the next step, you should know about the 3 warning signs for NextPlat (2 can't be ignored!) that we have uncovered.
If these risks are making you reconsider your opinion on NextPlat, explore our interactive list of high quality stocks to get an idea of what else is out there.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.??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.
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