The Marinus Pharmaceuticals, Inc. (NASDAQ:MRNS) share price has fared very poorly over the last month, falling by a substantial 80%. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 95% loss during that time.

Following the heavy fall in price, Marinus Pharmaceuticals may be sending very bullish signals at the moment with its price-to-sales (or "P/S") ratio of 0.7x, since almost half of all companies in the Pharmaceuticals industry in the United States have P/S ratios greater than 2.9x and even P/S higher than 13x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly reduced P/S.

How Has Marinus Pharmaceuticals Performed Recently?

Marinus Pharmaceuticals could be doing better as it's been growing revenue less than most other companies lately. The P/S ratio is probably low because investors think this lacklustre revenue performance isn't going to get any better. If you still like the company, you'd be hoping revenue doesn't get any worse and that you could pick up some stock while it's out of favour.

Is There Any Revenue Growth Forecasted For Marinus Pharmaceuticals?

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

Retrospectively, the last year delivered an exceptional 17% gain to the company's top line. This great performance means it was also able to deliver immense revenue growth over the last three years. So we can start by confirming that the company has done a tremendous job of growing revenue over that time.

Turning to the outlook, the next three years should generate growth of 50% each year as estimated by the eleven analysts watching the company. That's shaping up to be materially higher than the 19% each year growth forecast for the broader industry.

With this in consideration, we find it intriguing that Marinus Pharmaceuticals' P/S sits behind most of its industry peers. It looks like most investors are not convinced at all that the company can achieve future growth expectations.

The Bottom Line On Marinus Pharmaceuticals' P/S

Shares in Marinus Pharmaceuticals have plummeted and its P/S has followed suit. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

A look at Marinus Pharmaceuticals' revenues reveals that, despite glowing future growth forecasts, its P/S is much lower than we'd expect. There could be some major risk factors that are placing downward pressure on the P/S ratio. While the possibility of the share price plunging seems unlikely due to the high growth forecasted for the company, the market does appear to have some hesitation.

Having said that, be aware Marinus Pharmaceuticals is showing 5 warning signs in our investment analysis, and 3 of those are concerning.

If these risks are making you reconsider your opinion on Marinus Pharmaceuticals, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.