MannKind Corporation (NASDAQ:MNKD) shareholders would be excited to see that the share price has had a great month, posting a 35% gain and recovering from prior weakness. But the gains over the last month weren't enough to make shareholders whole, as the share price is still down 7.6% in the last twelve months.

Although its price has surged higher, MannKind may still look like a strong buying opportunity at present with its price-to-sales (or "P/S") ratio of 6.1x, considering almost half of all companies in the Biotechs industry in the United States have P/S ratios greater than 16x and even P/S higher than 75x aren't out of the ordinary. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so limited.

How Has MannKind Performed Recently?

Recent times haven't been great for MannKind as its revenue has been rising slower than most other companies. Perhaps the market is expecting the current trend of poor revenue growth to continue, which has kept the P/S suppressed. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

Is There Any Revenue Growth Forecasted For MannKind?

In order to justify its P/S ratio, MannKind would need to produce anemic growth that's substantially trailing the industry.

Retrospectively, the last year delivered an exceptional 99% gain to the company's top line. The strong recent performance means it was also able to grow revenue by 205% in total over the last three years. So we can start by confirming that the company has done a great job of growing revenue over that time.

Turning to the outlook, the next three years should generate growth of 24% per year as estimated by the six analysts watching the company. With the industry predicted to deliver 277% growth each year, the company is positioned for a weaker revenue result.

With this in consideration, its clear as to why MannKind's P/S is falling short industry peers. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

The Bottom Line On MannKind's P/S

Shares in MannKind have risen appreciably however, its P/S is still subdued. 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.

As we suspected, our examination of MannKind's analyst forecasts revealed that its inferior revenue outlook is contributing to its low P/S. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. The company will need a change of fortune to justify the P/S rising higher in the future.

There are also other vital risk factors to consider and we've discovered 2 warning signs for MannKind (1 is concerning!) that you should be aware of before investing here.

Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.

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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.