Curis, Inc. (NASDAQ:CRIS) shares have continued their recent momentum with a 36% gain in the last month alone. The bad news is that even after the stocks recovery in the last 30 days, shareholders are still underwater by about 6.6% over the last year.

In spite of the firm bounce in price, Curis may still be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 8.7x, since almost half of all companies in the Biotechs industry in the United States have P/S ratios greater than 13.1x and even P/S higher than 63x are not unusual. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

What Does Curis' P/S Mean For Shareholders?

Curis 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. The P/S ratio is probably low because investors think this poor revenue performance isn't going to get any better. If you still like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

Is There Any Revenue Growth Forecasted For Curis?

The only time you'd be truly comfortable seeing a P/S as low as Curis' is when the company's growth is on track to lag the industry.

Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 1.4%. The last three years don't look nice either as the company has shrunk revenue by 7.5% in aggregate. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

Turning to the outlook, the next three years should generate growth of 3.4% each year as estimated by the five analysts watching the company. That's shaping up to be materially lower than the 160% per year growth forecast for the broader industry.

With this information, we can see why Curis is trading at a P/S lower than the industry. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.

The Bottom Line On Curis' P/S

Curis' stock price has surged recently, but its but its P/S still remains modest. 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.

As we suspected, our examination of Curis' analyst forecasts revealed that its inferior revenue outlook is contributing to its low P/S. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. It's hard to see the share price rising strongly in the near future under these circumstances.

And what about other risks? Every company has them, and we've spotted 4 warning signs for Curis you should know about.

If you're unsure about the strength of Curis' 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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