Yahoo Finance Light Science Technologies Holdings Plc (LON:LST) Soars 69% But It's A Story Of Risk Vs Reward
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.
Even after such a large jump 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. 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.
Check out our latest analysis for Light Science Technologies Holdings
How Has Light Science Technologies Holdings Performed Recently?
The revenue growth achieved at Light Science Technologies Holdings over the last year would be more than acceptable for most companies. 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. Those who are bullish on Light Science Technologies Holdings will be hoping that this isn't the case, so that they can pick up the stock at a lower valuation.
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.
Do Revenue Forecasts Match The P/S Ratio?
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.
Retrospectively, the last year delivered an exceptional 19% gain to the company's top line. The latest three year period has also seen a 29% overall rise in revenue, aided extensively by its short-term performance. Therefore, it's fair to say the revenue growth recently has been respectable for the company.
This is in contrast to the rest of the industry, which is expected to grow by 5.1% over the next year, materially lower than the company's recent medium-term annualised growth rates.
In light of this, it's curious that Light Science Technologies Holdings' P/S sits in line with the majority of other companies. It may be that most investors are not convinced the company can maintain its recent growth rates.
The Final Word
Light Science Technologies Holdings' stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.
We didn't quite envision Light Science Technologies Holdings' P/S sitting in line with the wider industry, considering the revenue growth over the last three-year is higher than the current industry outlook. It'd be fair to assume that potential risks the company faces could be the contributing factor to the lower than expected P/S. It appears some are indeed anticipating revenue instability, because the persistence of these recent medium-term conditions would normally provide a boost to the share price.
Before you settle on your opinion, we've discovered 4 warning signs for Light Science Technologies Holdings that you should be aware of.
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.
