After Leaping 72% Energy Fuels Inc. (TSE:EFR) Shares Are Not Flying Under The Radar

Despite an already strong run, Energy Fuels Inc. (TSE:EFR) shares have been powering on, with a gain of 72% in the last thirty days. The last 30 days bring the annual gain to a very sharp 65%.

Following the firm bounce in price, when almost half of the companies in Canada's Oil and Gas industry have price-to-sales ratios (or "P/S") below 2.1x, you may consider Energy Fuels as a stock not worth researching with its 30.3x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so lofty.

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See our latest analysis for Energy Fuels

What Does Energy Fuels' P/S Mean For Shareholders?

Recent times have been advantageous for Energy Fuels as its revenues have been rising faster than most other companies. The P/S is probably high because investors think this strong revenue performance will continue. If not, then existing shareholders might be a little nervous about the viability of the share price.

Keen to find out how analysts think Energy Fuels' future stacks up against the industry? In that case, our free report is a great place to start.

How Is Energy Fuels' Revenue Growth Trending?

In order to justify its P/S ratio, Energy Fuels would need to produce outstanding growth that's well in excess of the industry.

If we review the last year of revenue growth, the company posted a terrific increase of 59%. 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.

Looking ahead now, revenue is anticipated to climb by 21% during the coming year according to the dual analysts following the company. That's shaping up to be materially higher than the 6.9% growth forecast for the broader industry.

With this in mind, it's not hard to understand why Energy Fuels' P/S is high relative to its industry peers. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

The Key Takeaway

Shares in Energy Fuels have seen a strong upwards swing lately, which has really helped boost its P/S figure. 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.

Our look into Energy Fuels shows that its P/S ratio remains high on the merit of its strong future revenues. At this stage investors feel the potential for a deterioration in revenues is quite remote, justifying the elevated P/S ratio. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

Plus, you should also learn about these 2 warning signs we've spotted with Energy Fuels (including 1 which can't be ignored).

If you're unsure about the strength of Energy Fuels' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.