The Marinus Pharmaceuticals, Inc. (NASDAQ:MRNS) share price has fared very poorly over the last month, falling by a substantial 84%. For any long-term shareholders, the last month ends a year to forget by locking in a 83% share price decline.

In spite of the heavy fall in price, it's still not a stretch to say that Marinus Pharmaceuticals' price-to-sales (or "P/S") ratio of 2.6x right now seems quite "middle-of-the-road" compared to the Pharmaceuticals industry in the United States, where the median P/S ratio is around 2.8x. 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.

What Does Marinus Pharmaceuticals' P/S Mean For Shareholders?

Recent times have been advantageous for Marinus Pharmaceuticals as its revenues have been rising faster than most other companies. One possibility is that the P/S ratio is moderate because investors think this strong revenue performance might be about to tail off. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

What Are Revenue Growth Metrics Telling Us About The P/S?

In order to justify its P/S ratio, Marinus Pharmaceuticals would need to produce growth that's similar to the industry.

If we review the last year of revenue growth, the company posted a terrific increase of 22%. This great performance means it was also able to deliver immense revenue growth over the last three years. 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 63% per year as estimated by the eleven analysts watching the company. With the industry only predicted to deliver 17% each year, the company is positioned for a stronger revenue result.

With this in consideration, we find it intriguing that Marinus Pharmaceuticals' P/S is closely matching its industry peers. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.

What We Can Learn From Marinus Pharmaceuticals' P/S?

Marinus Pharmaceuticals' plummeting stock price has brought its P/S back to a similar region as the rest of the industry. 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.

We've established that Marinus Pharmaceuticals currently trades on a lower than expected P/S since its forecasted revenue growth is higher than the wider industry. When we see a strong revenue outlook, with growth outpacing the industry, we can only assume potential uncertainty around these figures are what might be placing slight pressure on the P/S ratio. It appears some are indeed anticipating revenue instability, because these conditions should normally provide a boost to the share price.

You should always think about risks. Case in point, we've spotted 4 warning signs for Marinus Pharmaceuticals you should be aware of, and 1 of them is a bit concerning.

If these risks are making you reconsider your opinion on Marinus Pharmaceuticals, 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.