There wouldn't be many who think Patterson-UTI Energy, Inc.'s (NASDAQ:PTEN) price-to-sales (or "P/S") ratio of 0.6x is worth a mention when the median P/S for the Energy Services industry in the United States is similar at about 0.9x. 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.

How Has Patterson-UTI Energy Performed Recently?

Patterson-UTI Energy certainly has been doing a good job lately as it's been growing revenue more than most other companies. It might be that many expect the strong revenue performance to wane, which has kept the P/S ratio from rising. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

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

How Is Patterson-UTI Energy's Revenue Growth Trending?

The only time you'd be comfortable seeing a P/S like Patterson-UTI Energy's is when the company's growth is tracking the industry closely.

If we review the last year of revenue growth, the company posted a terrific increase of 73%. The latest three year period has also seen an incredible overall rise in revenue, aided by its incredible short-term performance. Accordingly, shareholders would have been over the moon with those medium-term rates of revenue growth.

Turning to the outlook, the next three years should generate growth of 3.3% per annum as estimated by the analysts watching the company. With the industry predicted to deliver 4.1% growth per annum, the company is positioned for a comparable revenue result.

In light of this, it's understandable that Patterson-UTI Energy's P/S sits in line with the majority of other companies. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

The Final Word

Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

A Patterson-UTI Energy's P/S seems about right to us given the knowledge that analysts are forecasting a revenue outlook that is similar to the Energy Services industry. Right now shareholders are comfortable with the P/S as they are quite confident future revenue won't throw up any surprises. All things considered, if the P/S and revenue estimates contain no major shocks, then it's hard to see the share price moving strongly in either direction in the near future.

And what about other risks? Every company has them, and we've spotted 1 warning sign for Patterson-UTI Energy you should know about.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.