Despite an already strong run, PetIQ, Inc. (NASDAQ:PETQ) shares have been powering on, with a gain of 38% in the last thirty days. The last 30 days bring the annual gain to a very sharp 53%.

Even after such a large jump in price, there still wouldn't be many who think PetIQ's price-to-sales (or "P/S") ratio of 0.8x is worth a mention when the median P/S in the United States' Healthcare industry is similar at about 1.1x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

What Does PetIQ's P/S Mean For Shareholders?

PetIQ certainly has been doing a good job lately as it's been growing revenue more than most other companies. It might be that many expect the strong revenue performance to wane, which has kept the P/S ratio from rising. 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 not quite in favour.

How Is PetIQ's Revenue Growth Trending?

PetIQ's P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.

Retrospectively, the last year delivered a decent 14% gain to the company's revenues. The latest three year period has also seen an excellent 33% overall rise in revenue, aided somewhat by its short-term performance. So we can start by confirming that the company has done a great job of growing revenues over that time.

Turning to the outlook, the next year should generate growth of 4.6% as estimated by the five analysts watching the company. That's shaping up to be materially lower than the 7.7% growth forecast for the broader industry.

In light of this, it's curious that PetIQ's P/S sits in line with the majority of other companies. Apparently many investors in the company are less bearish than analysts indicate and aren't willing to let go of their stock right now. Maintaining these prices will be difficult to achieve as this level of revenue growth is likely to weigh down the shares eventually.

What Does PetIQ's P/S Mean For Investors?

PetIQ's stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

When you consider that PetIQ's revenue growth estimates are fairly muted compared to the broader industry, it's easy to see why we consider it unexpected to be trading at its current P/S ratio. At present, we aren't confident in the P/S as the predicted future revenues aren't likely to support a more positive sentiment for long. Circumstances like this present a risk to current and prospective investors who may see share prices fall if the low revenue growth impacts the sentiment.

Before you settle on your opinion, we've discovered 4 warning signs for PetIQ (1 is a bit unpleasant!) that you should be aware of.

If you're unsure about the strength of PetIQ'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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