Despite an already strong run, Inogen, Inc. (NASDAQ:INGN) shares have been powering on, with a gain of 26% in the last thirty days. While recent buyers may be laughing, long-term holders might not be as pleased since the recent gain only brings the stock back to where it started a year ago.
In spite of the firm bounce in price, Inogen may still look like a strong buying opportunity at present with its price-to-sales (or "P/S") ratio of 0.7x, considering almost half of all companies in the Medical Equipment industry in the United States have P/S ratios greater than 3.2x and even P/S higher than 7x aren't out of the ordinary. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly reduced P/S.
NasdaqGS:INGN Price to Sales Ratio vs Industry July 16th 2024
What Does Inogen's P/S Mean For Shareholders?
While the industry has experienced revenue growth lately, Inogen's revenue has gone into reverse gear, which is not great. The P/S ratio is probably low because investors think this poor revenue performance isn't going to get any better. So while you could say the stock is cheap, investors will be looking for improvement before they see it as good value.
Want the full picture on analyst estimates for the company? Then our free report on Inogen will help you uncover what's on the horizon.
Do Revenue Forecasts Match The Low P/S Ratio?
In order to justify its P/S ratio, Inogen would need to produce anemic growth that's substantially trailing the industry.
Retrospectively, the last year delivered a frustrating 13% decrease to the company's top line. At least revenue has managed not to go completely backwards from three years ago in aggregate, thanks to the earlier period of growth. Therefore, it's fair to say that revenue growth has been inconsistent recently for the company.
Looking ahead now, revenue is anticipated to climb by 1.5% during the coming year according to the four analysts following the company. Meanwhile, the rest of the industry is forecast to expand by 9.4%, which is noticeably more attractive.
In light of this, it's understandable that Inogen'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.
The Final Word
Inogen's recent share price jump still sees fails to bring its P/S alongside the industry median. 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 expected, our analysis of Inogen's analyst forecasts confirms that the company's underwhelming revenue outlook is a major contributor to its low P/S. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. It's hard to see the share price rising strongly in the near future under these circumstances.
Plus, you should also learn about these 2 warning signs we've spotted with Inogen.
If you're unsure about the strength of Inogen's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.
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雖然Inogen, Inc. (NASDAQ:INGN) 的股票已經上漲得很快,最近三十天還漲了26%,新買家可能看到賺到了,但長揸者可能不會高興,因爲最近的漲幅也只是把股票帶回了一年前的起點。