Plug Power Inc. (NASDAQ:PLUG) shareholders that were waiting for something to happen have been dealt a blow with a 25% share price drop in the last month. For any long-term shareholders, the last month ends a year to forget by locking in a 73% share price decline.
Even after such a large drop in price, there still wouldn't be many who think Plug Power's price-to-sales (or "P/S") ratio of 1.9x is worth a mention when the median P/S in the United States' Electrical industry is similar at about 1.7x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.
What Does Plug Power's P/S Mean For Shareholders?
With revenue growth that's inferior to most other companies of late, Plug Power has been relatively sluggish. Perhaps the market is expecting future revenue performance to lift, which has kept the P/S from declining. However, if this isn't the case, investors might get caught out paying too much for the stock.
Want the full picture on analyst estimates for the company? Then our free report on Plug Power will help you uncover what's on the horizon.
How Is Plug Power's Revenue Growth Trending?
In order to justify its P/S ratio, Plug Power would need to produce growth that's similar to the industry.
Taking a look back first, we see that the company grew revenue by an impressive 27% last year. However, the latest three year period hasn't been as great in aggregate as it didn't manage to provide any growth at all. So it appears to us that the company has had a mixed result in terms of growing revenue over that time.
Turning to the outlook, the next three years should generate growth of 32% per annum as estimated by the analysts watching the company. Meanwhile, the rest of the industry is forecast to expand by 36% per year, which is noticeably more attractive.
With this in mind, we find it intriguing that Plug Power's 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.
The Key Takeaway
Following Plug Power's share price tumble, its P/S is just clinging on to the industry median P/S. 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.
Our look at the analysts forecasts of Plug Power's 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. Circumstances like this present a risk to current and prospective investors who may see share prices fall if the low revenue growth impacts the sentiment.
Before you settle on your opinion, we've discovered 3 warning signs for Plug Power that you should be aware of.
If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.
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上個月股價下跌了25%,這給一直在等待事情發生的Plug Power Inc.(納斯達克股票代碼:PLUG)的股東受到了打擊。對於任何長期股東來說,最後一個月的股價下跌幅度爲73%,從而結束了令人難忘的一年。