To the annoyance of some shareholders, Treace Medical Concepts, Inc. (NASDAQ:TMCI) shares are down a considerable 39% in the last month, which continues a horrid run for the company. For any long-term shareholders, the last month ends a year to forget by locking in a 74% share price decline.
Since its price has dipped substantially, Treace Medical Concepts' price-to-sales (or "P/S") ratio of 2.2x might make it look like a buy right now compared to the Medical Equipment industry in the United States, where around half of the companies have P/S ratios above 3x and even P/S above 6x are quite common. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.
Check out our latest analysis for Treace Medical Concepts
What Does Treace Medical Concepts' P/S Mean For Shareholders?
Recent times have been advantageous for Treace Medical Concepts as its revenues have been rising faster than most other companies. It might be that many expect the strong revenue performance to degrade substantially, which has repressed the share price, and thus the P/S ratio. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.
Want the full picture on analyst estimates for the company? Then our free report on Treace Medical Concepts will help you uncover what's on the horizon.
Do Revenue Forecasts Match The Low P/S Ratio?
There's an inherent assumption that a company should underperform the industry for P/S ratios like Treace Medical Concepts' to be considered reasonable.
Retrospectively, the last year delivered an exceptional 39% gain to the company's top line. The latest three year period has also seen an excellent 204% overall rise in revenue, aided by its short-term performance. So we can start by confirming that the company has done a great job of growing revenue over that time.
Turning to the outlook, the next three years should generate growth of 21% each year as estimated by the seven analysts watching the company. With the industry only predicted to deliver 11% per year, the company is positioned for a stronger revenue result.
With this in consideration, we find it intriguing that Treace Medical Concepts' P/S sits behind most of its industry peers. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.
The Key Takeaway
Treace Medical Concepts' P/S has taken a dip along with its share price. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.
Treace Medical Concepts' analyst forecasts revealed that its superior revenue outlook isn't contributing to its P/S anywhere near as much as we would have predicted. When we see strong growth forecasts like this, we can only assume potential risks are what might be placing significant pressure on the P/S ratio. It appears the market could be anticipating revenue instability, because these conditions should normally provide a boost to the share price.
And what about other risks? Every company has them, and we've spotted 3 warning signs for Treace Medical Concepts you should know about.
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.
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.
令一些股東煩惱的是,Treace Medical Concepts, Inc.(納斯達克股票代碼:TMCI)的股價在上個月大幅下跌了39%,這延續了該公司的糟糕表現。對於任何長期股東來說,最後一個月的股價下跌幅度爲74%,這讓人忘記了一年。
由於其價格已大幅下跌,與美國的醫療設備行業相比,Treace Medical Concepts的2.2倍市盈率(或 “市盈率”)可能使其現在看起來像買入。在美國,大約有一半的公司的市盈率超過3倍,甚至市盈率也高於6倍也很常見。但是,僅按面值計算市盈率是不明智的,因爲可能有其侷限性的解釋。
查看我們對Treace Medical Concepts的最新分析
Treace Medical Concepts的市盈率對股東意味着什麼?
最近對Treace Medical Concepts來說是有利的,因爲其收入的增長速度比大多數其他公司都要快。許多人可能預計強勁的收入表現將大幅下降,這抑制了股價,從而抑制了市盈率。如果你喜歡這家公司,你會希望情況並非如此,這樣你就有可能在失寵的時候買入一些股票。
想全面了解分析師對公司的估計?然後,我們關於Treace Medical Concepts的免費報告將幫助你發現即將發生的事情。
收入預測是否與低市盈率相符?
有一種固有的假設是,如果像Treace Medical Concepts這樣的市盈率被認爲是合理的,一家公司的表現應該低於該行業。