Aquestive Therapeutics, Inc. (NASDAQ:AQST) shares have continued their recent momentum with a 26% gain in the last month alone. The annual gain comes to 181% following the latest surge, making investors sit up and take notice.

Although its price has surged higher, there still wouldn't be many who think Aquestive Therapeutics' price-to-sales (or "P/S") ratio of 3.5x is worth a mention when the median P/S in the United States' Pharmaceuticals industry is similar at about 3x. 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.

See our latest analysis for Aquestive Therapeutics

What Does Aquestive Therapeutics' P/S Mean For Shareholders?

Aquestive Therapeutics 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. It might be that many expect the dour revenue performance to strengthen positively, which has kept the P/S from falling. If not, then existing shareholders may be a little nervous about the viability of the share price.

Is There Some Revenue Growth Forecasted For Aquestive Therapeutics?

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

If we review the last year of revenue, the company posted a result that saw barely any deviation from a year ago. The lack of growth did nothing to help the company's aggregate three-year performance, which is an unsavory 13% drop in revenue. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

Shifting to the future, estimates from the six analysts covering the company suggest revenue should grow by 15% each year over the next three years. With the industry predicted to deliver 49% growth per annum, the company is positioned for a weaker revenue result.

With this in mind, we find it intriguing that Aquestive Therapeutics' P/S is closely matching its industry peers. Apparently many investors in the company are less bearish than analysts indicate and aren't willing to let go of their stock right now. These shareholders may be setting themselves up for future disappointment if the P/S falls to levels more in line with the growth outlook.

What We Can Learn From Aquestive Therapeutics' P/S?

Aquestive Therapeutics appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry 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.

Our look at the analysts forecasts of Aquestive Therapeutics' revenue prospects has shown that its inferior revenue outlook isn't negatively impacting its P/S as much as we would have predicted. At present, we aren't confident in the P/S as the predicted future revenues aren't likely to support a more positive sentiment for long. A positive change is needed in order to justify the current price-to-sales ratio.

Plus, you should also learn about these 4 warning signs we've spotted with Aquestive Therapeutics (including 1 which makes us a bit uncomfortable).

If these risks are making you reconsider your opinion on Aquestive Therapeutics, 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.