FTAI Infrastructure Inc.'s (NASDAQ:FIP) price-to-sales (or "P/S") ratio of 1.4x may not look like an appealing investment opportunity when you consider close to half the companies in the Transportation industry in the United States have P/S ratios below 0.9x. However, the P/S might be high for a reason and it requires further investigation to determine if it's justified.
See our latest analysis for FTAI Infrastructure
NasdaqGS:FIP Price to Sales Ratio vs Industry December 15th 2023
What Does FTAI Infrastructure's Recent Performance Look Like?
Recent times have been advantageous for FTAI Infrastructure 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. If not, then existing shareholders might be a little nervous about the viability of the share price.
Keen to find out how analysts think FTAI Infrastructure's future stacks up against the industry? In that case, our free report is a great place to start.
How Is FTAI Infrastructure's Revenue Growth Trending?
In order to justify its P/S ratio, FTAI Infrastructure would need to produce impressive growth in excess of the industry.
Taking a look back first, we see that the company grew revenue by an impressive 30% last year. This great performance means it was also able to deliver immense revenue growth over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.
Turning to the outlook, the next year should generate growth of 57% as estimated by the only analyst watching the company. Meanwhile, the rest of the industry is forecast to only expand by 7.6%, which is noticeably less attractive.
With this in mind, it's not hard to understand why FTAI Infrastructure's P/S is high relative to its industry peers. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.
The Final Word
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 into FTAI Infrastructure shows that its P/S ratio remains high on the merit of its strong future revenues. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. It's hard to see the share price falling strongly in the near future under these circumstances.
It is also worth noting that we have found 3 warning signs for FTAI Infrastructure (2 can't be ignored!) that you need to take into consideration.
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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