Inspire Medical Systems, Inc. (NYSE:INSP) shares have had a really impressive month, gaining 39% after a shaky period beforehand. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 22% over that time.
Since its price has surged higher, given around half the companies in the United States' Medical Equipment industry have price-to-sales ratios (or "P/S") below 3x, you may consider Inspire Medical Systems as a stock to avoid entirely with its 8x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.
NYSE:INSP Price to Sales Ratio vs Industry August 8th 2024
How Has Inspire Medical Systems Performed Recently?
With revenue growth that's superior to most other companies of late, Inspire Medical Systems has been doing relatively well. It seems that many are expecting the strong revenue performance to persist, which has raised the P/S. If not, then existing shareholders might be a little nervous about the viability of the share price.
Want the full picture on analyst estimates for the company? Then our free report on Inspire Medical Systems will help you uncover what's on the horizon.
Do Revenue Forecasts Match The High P/S Ratio?
There's an inherent assumption that a company should far outperform the industry for P/S ratios like Inspire Medical Systems' to be considered reasonable.
Retrospectively, the last year delivered an exceptional 34% 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.
Shifting to the future, estimates from the analysts covering the company suggest revenue should grow by 20% each year over the next three years. That's shaping up to be materially higher than the 9.5% each year growth forecast for the broader industry.
In light of this, it's understandable that Inspire Medical Systems' P/S sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.
The Final Word
Inspire Medical Systems' P/S has grown nicely over the last month thanks to a handy boost in the 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.
We've established that Inspire Medical Systems maintains its high P/S on the strength of its forecasted revenue growth being higher than the the rest of the Medical Equipment industry, as expected. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. It's hard to see the share price falling strongly in the near future under these circumstances.
You should always think about risks. Case in point, we've spotted 1 warning sign for Inspire Medical Systems you should be aware of.
Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.
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Inspire Medical Systems, Inc.(紐交所:INSP)股票在經歷了動盪的時期後,上個月的漲幅達到了驚人的39%。不幸的是,上個月的漲幅對於過去一年的虧損並沒有什麼幫助,該股票在此期間仍下跌22%。
由於它的價格已經大漲,考慮到美國醫療設備行業約有一半的公司市銷率(或「P/S」)低於3倍,您可以考慮完全避開Inspire Medical Systems的股票,因爲它現在的市銷率已達到了8倍。儘管如此,我們仍需要深入挖掘,以確定這種高度推高P / S的基本合理性。
紐交所:INSP股價與行業市銷率的比較(2024年8月8日)
Inspire Medical Systems最近的表現如何?
由於營收增長比其他大多數公司表現優異,Inspire Medical Systems最近的表現相對不錯。許多人提出了強勁的營收表現會持續下去的預期,這推高了市銷率。如果沒有,那麼現有股東可能會對股價的可行性有些擔憂。
想要了解該公司分析師預測的全貌嗎?我們提供的Inspire Medical Systems免費報告將幫助您發現未來發展趨勢。