Yahoo Finance Light Science Technologies Holdings Plc (LON:LST) Stock Rockets 69% But Many Are Still Ignoring The Company
The Light Science Technologies Holdings Plc (LON:LST) share price has done very well over the last month, posting an excellent gain of 69%. But the last month did very little to improve the 66% share price decline over the last year.
In spite of the firm bounce in price, there still wouldn't be many who think Light Science Technologies Holdings' price-to-sales (or "P/S") ratio of 0.8x is worth a mention when the median P/S in the United Kingdom's Electronic industry is similar at about 1.2x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.
View our latest analysis for Light Science Technologies Holdings
What Does Light Science Technologies Holdings' P/S Mean For Shareholders?
Light Science Technologies Holdings has been doing a good job lately as it's been growing revenue at a solid pace. Perhaps the market is expecting future revenue performance to only keep up with the broader industry, which has keeping the P/S in line with expectations. If that doesn't eventuate, then existing shareholders probably aren't too pessimistic about the future direction of the share price.
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Light Science Technologies Holdings will help you shine a light on its historical performance.
Is There Some Revenue Growth Forecasted For Light Science Technologies Holdings?
There's an inherent assumption that a company should be matching the industry for P/S ratios like Light Science Technologies Holdings' to be considered reasonable.
Taking a look back first, we see that the company grew revenue by an impressive 19% last year. Revenue has also lifted 29% in aggregate from three years ago, mostly thanks to the last 12 months of growth. Accordingly, shareholders would have probably been satisfied with the medium-term rates of revenue growth.
Comparing that to the industry, which is only predicted to deliver 5.1% growth in the next 12 months, the company's momentum is stronger based on recent medium-term annualised revenue results.
With this information, we find it interesting that Light Science Technologies Holdings is trading at a fairly similar P/S compared to the industry. It may be that most investors are not convinced the company can maintain its recent growth rates.
What We Can Learn From Light Science Technologies Holdings' P/S?
Light Science Technologies Holdings appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.
We've established that Light Science Technologies Holdings currently trades on a lower than expected P/S since its recent three-year growth is higher than the wider industry forecast. When we see strong revenue with faster-than-industry growth, we can only assume potential risks are what might be placing pressure on the P/S ratio. At least the risk of a price drop looks to be subdued if recent medium-term revenue trends continue, but investors seem to think future revenue could see some volatility.
Plus, you should also learn about these 4 warning signs we've spotted with Light Science Technologies Holdings.
If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).
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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.
