Illumina, Inc.'s (NASDAQ:ILMN) Share Price Not Quite Adding Up
Illumina, Inc.'s (NASDAQ:ILMN) Share Price Not Quite Adding Up
Illumina, Inc.'s (NASDAQ:ILMN) price-to-sales (or "P/S") ratio of 4.2x may not look like an appealing investment opportunity when you consider close to half the companies in the Life Sciences industry in the United States have P/S ratios below 3.3x. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the elevated P/S.
What Does Illumina's Recent Performance Look Like?
Illumina's negative revenue growth of late has neither been better nor worse than most other companies. One possibility is that the P/S ratio is high because investors think the company can turn things around and break free from the broader downward trend in revenue. If not, then existing shareholders may be a little nervous about the viability of the share price.
Keen to find out how analysts think Illumina's future stacks up against the industry? In that case, our free report is a great place to start.How Is Illumina's Revenue Growth Trending?
In order to justify its P/S ratio, Illumina would need to produce impressive growth in excess of the industry.
Retrospectively, the last year delivered a frustrating 1.8% decrease to the company's top line. Still, the latest three year period has seen an excellent 39% overall rise in revenue, in spite of its unsatisfying short-term performance. Accordingly, while they would have preferred to keep the run going, shareholders would definitely welcome the medium-term rates of revenue growth.
Shifting to the future, estimates from the analysts covering the company suggest revenue should grow by 6.3% per annum over the next three years. Meanwhile, the rest of the industry is forecast to expand by 6.4% per year, which is not materially different.
In light of this, it's curious that Illumina's P/S sits above the majority of other companies. Apparently many investors in the company are more bullish than analysts indicate and aren't willing to let go of their stock right now. These shareholders may be setting themselves up for disappointment if the P/S falls to levels more in line with the growth outlook.
What Does Illumina's P/S Mean For Investors?
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.
Analysts are forecasting Illumina's revenues to only grow on par with the rest of the industry, which has lead to the high P/S ratio being unexpected. Right now we are uncomfortable with the relatively high share price as the predicted future revenues aren't likely to support such positive sentiment for long. This places shareholders' investments at risk and potential investors in danger of paying an unnecessary premium.
Many other vital risk factors can be found on the company's balance sheet. Our free balance sheet analysis for Illumina with six simple checks will allow you to discover any risks that could be an issue.
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.
Illumina, Inc. '考慮到美國生命科學行業將近一半的公司的市盈率低於3.3倍,s(納斯達克股票代碼:ILMN)4.2倍的市銷率(或 “市盈率”)可能不是一個有吸引力的投資機會。但是,我們需要更深入地挖掘,以確定市銷率上升是否有合理的基礎。
Illumina 最近的表現是什麼樣子?
Illumina最近的負收入增長既不好也沒有比其他大多數公司差。一種可能性是市銷率很高,因爲投資者認爲公司可以扭轉局面,擺脫更廣泛的收入下降趨勢。如果不是,那麼現有股東可能會對股價的可行性有些緊張。
想了解分析師如何看待Illumina的未來與該行業的對立嗎?在這種情況下,我們的免費報告是一個很好的起點。Illumina 的收入增長趨勢如何?
爲了證明其市銷率是合理的,Illumina需要實現超過該行業的驚人增長。
回顧過去,去年該公司的收入下降了令人沮喪的1.8%。儘管如此,儘管短期表現不令人滿意,但最近三年的總體收入仍增長了39%。因此,儘管股東們本來希望繼續經營,但他們肯定會歡迎中期收入增長率。
展望未來,報道該公司的分析師的估計表明,未來三年收入將每年增長6.3%。同時,預計該行業的其他部門每年將增長6.4%,這沒有實質性區別。
有鑑於此,奇怪的是,Illumina的市銷率高於其他多數公司。顯然,該公司的許多投資者比分析師所表示的更爲看漲,並且不願意立即放棄股票。如果市銷率降至更符合增長前景的水平,這些股東可能會爲失望做好準備。
Illumina的市銷率對投資者意味着什麼?
我們可以說,市銷比率的力量主要不是作爲一種估值工具,而是用來衡量當前的投資者情緒和未來預期。
分析師預測,Illumina的收入增長只能與該行業的其他公司持平,這導致高市銷率出人意料。目前,我們對相對較高的股價感到不舒服,因爲預期的未來收入不太可能長期支撐這種積極情緒。這使股東的投資處於風險之中,潛在投資者面臨支付不必要的溢價的危險。
在公司的資產負債表上可以找到許多其他重要的風險因素。我們對Illumina的免費資產負債表分析包括六張簡單的支票,將使您發現任何可能存在問題的風險。
如果過去盈利增長穩健的公司處於困境,那麼你可能希望看到這些盈利增長強勁、市盈率低的其他公司的免費集合。
對這篇文章有反饋嗎?對內容感到擔憂?直接聯繫我們。 或者,給編輯團隊 (at) simplywallst.com 發送電子郵件。
Simply Wall St的這篇文章本質上是籠統的。我們僅使用公正的方法根據歷史數據和分析師的預測提供評論,我們的文章無意作爲財務建議。它不構成買入或賣出任何股票的建議,也沒有考慮到您的目標或財務狀況。我們的目標是爲您提供由基本數據驅動的長期重點分析。請注意,我們的分析可能不考慮最新的價格敏感型公司公告或定性材料。簡而言之,華爾街沒有持有任何上述股票的頭寸。
譯文內容由第三人軟體翻譯。
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