Stronghold Digital Mining, Inc. (NASDAQ:SDIG) shareholders won't be pleased to see that the share price has had a very rough month, dropping 27% and undoing the prior period's positive performance. For any long-term shareholders, the last month ends a year to forget by locking in a 61% share price decline.
Following the heavy fall in price, Stronghold Digital Mining's price-to-sales (or "P/S") ratio of 0.4x might make it look like a strong buy right now compared to the wider Software industry in the United States, where around half of the companies have P/S ratios above 4.5x and even P/S above 11x 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 so limited.
What Does Stronghold Digital Mining's P/S Mean For Shareholders?
Stronghold Digital Mining hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. It seems that many are expecting the poor revenue performance to persist, which has repressed the P/S ratio. 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 Stronghold Digital Mining will help you uncover what's on the horizon.
How Is Stronghold Digital Mining's Revenue Growth Trending?
The only time you'd be truly comfortable seeing a P/S as depressed as Stronghold Digital Mining's is when the company's growth is on track to lag the industry decidedly.
Retrospectively, the last year delivered a frustrating 13% decrease to the company's top line. In spite of this, the company still managed to deliver immense revenue growth over the last three years. So while the company has done a great job in the past, it's somewhat concerning to see revenue growth decline so harshly.
Turning to the outlook, the next year should generate growth of 6.5% as estimated by the three analysts watching the company. Meanwhile, the rest of the industry is forecast to expand by 22%, which is noticeably more attractive.
In light of this, it's understandable that Stronghold Digital Mining's P/S sits below the majority of other companies. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.
What We Can Learn From Stronghold Digital Mining's P/S?
Having almost fallen off a cliff, Stronghold Digital Mining's share price has pulled its P/S way down as well. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.
We've established that Stronghold Digital Mining 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. The company will need a change of fortune to justify the P/S rising higher in the future.
You should always think about risks. Case in point, we've spotted 7 warning signs for Stronghold Digital Mining you should be aware of, and 4 of them don't sit too well with us.
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.
Stronghold Digital Mining, Inc.(纳斯达克:SDIG)的股东们将不会满意看到股价经历了一个非常艰难的月份,下跌了27%,并扭转了上一期的良好表现。对于任何长期股东来说,上个月结束了一个要忘记的年份,股价下跌了61%。
在价格大幅下跌后,Stronghold Digital Mining(SDIG)的市销率(即“P / S”)为0.4倍,与美国软件行业其他公司相比,现在看起来似乎是一个强有力的购买机会。在那里,大约一半的公司市销率超过4.5倍,即使是市销率超过11倍也很普遍。虽然仅凭市销率本身来判断并不明智,因为价格受限的原因可能有解释。
Stronghold Digital Mining(SDIG)的市销率对股东意味着什么?
Stronghold Digital Mining的营业收入下降情况不佳,与其他公司的收入平均增长相比,其下降幅度更大。看起来,许多人都预计这种差劲的营收表现将持续,这抑制了市销率。因此,虽然你可以说这只股票很便宜,但投资者将寻求改善才会将其视为有价值的投资。
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Stronghold Digital Mining的营收增长走势如何?
当公司的成长势头明显落后于行业时,只有Stronghold Digital Mining这样市销率非常低的情况,你才会真正感到舒适。