Despite an already strong run, ReWalk Robotics Ltd. (NASDAQ:LFWD) shares have been powering on, with a gain of 399% in the last thirty days. This latest share price bounce rounds out a remarkable 478% gain over the last twelve months.

After such a large jump in price, ReWalk Robotics may be sending very bearish signals at the moment with a price-to-sales (or "P/S") ratio of 18.1x, since almost half of all companies in the Medical Equipment industry in the United States have P/S ratios under 3.4x and even P/S lower than 1.3x are not unusual. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so lofty.

What Does ReWalk Robotics' Recent Performance Look Like?

ReWalk Robotics certainly has been doing a good job lately as it's been growing revenue more than most other companies. It seems the market expects this form will continue into the future, hence the elevated P/S ratio. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

Is There Enough Revenue Growth Forecasted For ReWalk Robotics?

There's an inherent assumption that a company should far outperform the industry for P/S ratios like ReWalk Robotics' to be considered reasonable.

Retrospectively, the last year delivered an exceptional 151% gain to the company's top line. The strong recent performance means it was also able to grow revenue by 215% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Turning to the outlook, the next three years should generate growth of 58% per year as estimated by the lone analyst watching the company. With the industry only predicted to deliver 9.5% each year, the company is positioned for a stronger revenue result.

In light of this, it's understandable that ReWalk Robotics' P/S sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Key Takeaway

The strong share price surge has lead to ReWalk Robotics' P/S soaring as well. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

As we suspected, our examination of ReWalk Robotics' analyst forecasts revealed that its superior revenue outlook is contributing to its high P/S. At this stage investors feel the potential for a deterioration in revenues is quite remote, justifying the elevated P/S ratio. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

Plus, you should also learn about these 3 warning signs we've spotted with ReWalk Robotics (including 1 which shouldn't be ignored).

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.