Despite an already strong run, American Public Education, Inc. (NASDAQ:APEI) shares have been powering on, with a gain of 36% in the last thirty days. The annual gain comes to 206% following the latest surge, making investors sit up and take notice.

In spite of the firm bounce in price, it would still be understandable if you think American Public Education is a stock with good investment prospects with a price-to-sales ratios (or "P/S") of 0.5x, considering almost half the companies in the United States' Consumer Services industry have P/S ratios above 1.4x. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

How Has American Public Education Performed Recently?

Recent times haven't been great for American Public Education as its revenue has been rising slower than most other companies. It seems that many are expecting the uninspiring revenue performance to persist, which has repressed the growth of the P/S ratio. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

Is There Any Revenue Growth Forecasted For American Public Education?

There's an inherent assumption that a company should underperform the industry for P/S ratios like American Public Education's to be considered reasonable.

Retrospectively, the last year delivered virtually the same number to the company's top line as the year before. Although pleasingly revenue has lifted 80% in aggregate from three years ago, notwithstanding the last 12 months. Therefore, it's fair to say the revenue growth recently has been great for the company, but investors will want to ask why it has slowed to such an extent.

Looking ahead now, revenue is anticipated to climb by 4.0% during the coming year according to the four analysts following the company. That's shaping up to be materially lower than the 16% growth forecast for the broader industry.

In light of this, it's understandable that American Public Education's P/S sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

What We Can Learn From American Public Education's P/S?

The latest share price surge wasn't enough to lift American Public Education's P/S close to the industry median. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

As we suspected, our examination of American Public Education's analyst forecasts revealed that its inferior revenue outlook is contributing to its low P/S. Shareholders' pessimism on the revenue prospects for the company seems to be the main contributor to the depressed P/S. The company will need a change of fortune to justify the P/S rising higher in the future.

There are also other vital risk factors to consider before investing and we've discovered 2 warning signs for American Public Education that you should be aware of.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

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