Bit Digital, Inc. (NASDAQ:BTBT) shareholders are no doubt pleased to see that the share price has bounced 33% in the last month, although it is still struggling to make up recently lost ground. Unfortunately, despite the strong performance over the last month, the full year gain of 3.5% isn't as attractive.

Although its price has surged higher, you could still be forgiven for feeling indifferent about Bit Digital's P/S ratio of 4.8x, since the median price-to-sales (or "P/S") ratio for the Software industry in the United States is also close to 4.5x. 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.

What Does Bit Digital's P/S Mean For Shareholders?

Bit Digital certainly has been doing a good job lately as it's been growing revenue more than most other companies. One possibility is that the P/S ratio is moderate because investors think this strong revenue performance might be about to tail off. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

Want the full picture on analyst estimates for the company? Then our free report on Bit Digital will help you uncover what's on the horizon.

How Is Bit Digital's Revenue Growth Trending?

In order to justify its P/S ratio, Bit Digital would need to produce growth that's similar to the industry.

Retrospectively, the last year delivered an exceptional 109% gain to the company's top line. Although, its longer-term performance hasn't been as strong with three-year revenue growth being relatively non-existent overall. Therefore, it's fair to say that revenue growth has been inconsistent recently for the company.

Looking ahead now, revenue is anticipated to climb by 106% during the coming year according to the three analysts following the company. That's shaping up to be materially higher than the 15% growth forecast for the broader industry.

In light of this, it's curious that Bit Digital'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.

The Bottom Line On Bit Digital's P/S

Bit Digital's stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

Looking at Bit Digital's analyst forecasts revealed that its superior revenue outlook isn't giving the boost to its P/S that we would've expected. When we see a strong revenue outlook, with growth outpacing the industry, we can only assume potential uncertainty around these figures are what might be placing slight pressure on the P/S ratio. However, if you agree with the analysts' forecasts, you may be able to pick up the stock at an attractive price.

Before you take the next step, you should know about the 4 warning signs for Bit Digital (2 shouldn't be ignored!) that we have uncovered.

If these risks are making you reconsider your opinion on Bit Digital, explore our interactive list of high quality stocks to get an idea of what else is out there.

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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.