Those holding REGENXBIO Inc. (NASDAQ:RGNX) shares would be relieved that the share price has rebounded 33% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 15% in the last twelve months.

In spite of the firm bounce in price, REGENXBIO may still be sending buy signals at present with its price-to-sales (or "P/S") ratio of 8.3x, considering almost half of all companies in the Biotechs industry in the United States have P/S ratios greater than 14.7x and even P/S higher than 62x aren't out of the ordinary. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

What Does REGENXBIO's Recent Performance Look Like?

REGENXBIO could be doing better as its revenue has been going backwards lately while most other companies have been seeing positive revenue growth. Perhaps the P/S remains low as investors think the prospects of strong revenue growth aren't on the horizon. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

How Is REGENXBIO's Revenue Growth Trending?

REGENXBIO's P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.

Retrospectively, the last year delivered a frustrating 79% decrease to the company's top line. This means it has also seen a slide in revenue over the longer-term as revenue is down 31% in total over the last three years. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

Shifting to the future, estimates from the eight analysts covering the company suggest revenue should grow by 36% each year over the next three years. That's shaping up to be materially lower than the 254% per year growth forecast for the broader industry.

With this information, we can see why REGENXBIO is trading at a P/S lower than the industry. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

The Key Takeaway

The latest share price surge wasn't enough to lift REGENXBIO's P/S close to the industry median. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

We've established that REGENXBIO maintains its low P/S on the weakness of its forecast growth being lower than the wider industry, as expected. Shareholders' pessimism on the revenue prospects for the company seems to be the main contributor to the depressed P/S. 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 REGENXBIO (including 1 which is a bit concerning).

If you're unsure about the strength of REGENXBIO'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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