Unfortunately for some shareholders, the CVRx, Inc. (NASDAQ:CVRX) share price has dived 27% in the last thirty days, prolonging recent pain. The drop over the last 30 days has capped off a tough year for shareholders, with the share price down 46% in that time.
Although its price has dipped substantially, you could still be forgiven for feeling indifferent about CVRx's P/S ratio of 3.4x, since the median price-to-sales (or "P/S") ratio for the Medical Equipment industry in the United States is also close to 3.2x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.
NasdaqGS:CVRX Price to Sales Ratio vs Industry June 4th 2024
How Has CVRx Performed Recently?
With revenue growth that's superior to most other companies of late, CVRx has been doing relatively well. Perhaps the market is expecting this level of performance to taper off, keeping the P/S from soaring. If the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.
Want the full picture on analyst estimates for the company? Then our free report on CVRx will help you uncover what's on the horizon.
How Is CVRx's Revenue Growth Trending?
CVRx'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.
If we review the last year of revenue growth, the company posted a terrific increase of 60%. Spectacularly, three year revenue growth has ballooned by several orders of magnitude, thanks in part to the last 12 months of revenue growth. Therefore, it's fair to say the revenue growth recently has been superb for the company.
Shifting to the future, estimates from the six analysts covering the company suggest revenue should grow by 33% per annum over the next three years. That's shaping up to be materially higher than the 11% each year growth forecast for the broader industry.
In light of this, it's curious that CVRx's P/S sits in line with the majority of other companies. It may be that most investors aren't convinced the company can achieve future growth expectations.
What We Can Learn From CVRx's P/S?
CVRx's plummeting stock price has brought its P/S back to a similar region as 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.
Despite enticing revenue growth figures that outpace the industry, CVRx's P/S isn't quite what we'd expect. There could be some risks that the market is pricing in, which is preventing the P/S ratio from matching the positive outlook. However, if you agree with the analysts' forecasts, you may be able to pick up the stock at an attractive price.
Having said that, be aware CVRx is showing 3 warning signs in our investment analysis, you should know about.
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.
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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.