Despite an already strong run, Rent the Runway, Inc. (NASDAQ:RENT) shares have been powering on, with a gain of 43% in the last thirty days. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 42% over that time.
In spite of the firm bounce in price, it's still not a stretch to say that Rent the Runway's price-to-sales (or "P/S") ratio of 0.3x right now seems quite "middle-of-the-road" compared to the Specialty Retail industry in the United States, where the median P/S ratio is around 0.4x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.
NasdaqGM:RENT Price to Sales Ratio vs Industry June 11th 2024
How Has Rent the Runway Performed Recently?
Rent the Runway hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. One possibility is that the P/S ratio is moderate because investors think this poor revenue performance will turn around. If not, then existing shareholders may be a little nervous about the viability of the share price.
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Rent the Runway.
How Is Rent the Runway's Revenue Growth Trending?
The only time you'd be comfortable seeing a P/S like Rent the Runway's is when the company's growth is tracking the industry closely.
In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 1.5%. However, a few very strong years before that means that it was still able to grow revenue by an impressive 104% in total over the last three years. So we can start by confirming that the company has generally done a very good job of growing revenue over that time, even though it had some hiccups along the way.
Turning to the outlook, the next year should generate growth of 4.1% as estimated by the three analysts watching the company. Meanwhile, the rest of the industry is forecast to expand by 3.6%, which is not materially different.
In light of this, it's understandable that Rent the Runway's P/S sits in line with the majority of other companies. It seems most investors are expecting to see average future growth and are only willing to pay a moderate amount for the stock.
What Does Rent the Runway's P/S Mean For Investors?
Its shares have lifted substantially and now Rent the Runway's P/S is back within range of the industry median. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.
A Rent the Runway's P/S seems about right to us given the knowledge that analysts are forecasting a revenue outlook that is similar to the Specialty Retail industry. At this stage investors feel the potential for an improvement or deterioration in revenue isn't great enough to push P/S in a higher or lower direction. Unless these conditions change, they will continue to support the share price at these levels.
Having said that, be aware Rent the Runway is showing 7 warning signs in our investment analysis, and 3 of those don't sit too well with us.
It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).
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尽管Rent the Runway,Inc. (NASDAQ:RENT)股票已经经历了一波强劲的上涨,但在过去30天里,该公司股票仍然在继续上涨,涨幅达43%。不幸的是,在过去的一年中,该股票依然下跌了42%,过去一个月的涨幅并没有弥补过去一年的损失。
尽管价格有所反弹,但Rent the Runway的市销率(或“P/S”)目前为0.3倍,与美国专业零售业中位数市销率约为0.4倍相比,似乎相对“中等”。然而,如果没有基于理性的P/S, 则投资者可能会忽略一个明显的机会或潜在的问题。
纳斯达克GM:RENT市销率与行业板块相比,截至2024年6月11日
Rent the Runway最近的表现如何?
由于其营收下降表现不佳,Rent the Runway的表现一直不佳,与其他公司相比,其他公司上涨了平均水平。一种可能是市销率是适度的,因为投资者认为这种差劲的营收表现将扭转。如果没有,那么现有股东可能会对股票的可行性有些紧张。