Despite an already strong run, Rocket Lab USA, Inc. (NASDAQ:RKLB) shares have been powering on, with a gain of 67% in the last thirty days. The annual gain comes to 110% following the latest surge, making investors sit up and take notice.

Following the firm bounce in price, you could be forgiven for thinking Rocket Lab USA is a stock to steer clear of with a price-to-sales ratios (or "P/S") of 14.7x, considering almost half the companies in the United States' Aerospace & Defense industry have P/S ratios below 2.3x. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.

How Rocket Lab USA Has Been Performing

Recent times have been advantageous for Rocket Lab USA as its revenues have been rising faster than most other companies. It seems the market expects this form will continue into the future, hence the elevated P/S ratio. However, if this isn't the case, investors might get caught out paying too much for the stock.

Keen to find out how analysts think Rocket Lab USA's future stacks up against the industry? In that case, our free report is a great place to start.

How Is Rocket Lab USA's Revenue Growth Trending?

In order to justify its P/S ratio, Rocket Lab USA would need to produce outstanding growth that's well in excess of the industry.

Retrospectively, the last year delivered an exceptional 41% gain to the company's top line. 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 analysts covering the company suggest revenue should grow by 46% per annum over the next three years. With the industry only predicted to deliver 2.9% per year, the company is positioned for a stronger revenue result.

In light of this, it's understandable that Rocket Lab USA's P/S sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

What Does Rocket Lab USA's P/S Mean For Investors?

Shares in Rocket Lab USA have seen a strong upwards swing lately, which has really helped boost its P/S figure. 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 Rocket Lab USA maintains its high P/S on the strength of its forecasted revenue growth being higher than the the rest of the Aerospace & Defense industry, as expected. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. It's hard to see the share price falling strongly in the near future under these circumstances.

There are also other vital risk factors to consider before investing and we've discovered 3 warning signs for Rocket Lab USA that you should be aware of.

If you're unsure about the strength of Rocket Lab USA's 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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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.