Positive Sentiment Still Eludes Ascend Wellness Holdings, Inc. (CSE:AAWH.U) Following 32% Share Price Slump

Ascend Wellness Holdings, Inc. (CSE:AAWH.U) shares have retraced a considerable 32% in the last month, reversing a fair amount of their solid recent performance. To make matters worse, the recent drop has wiped out a year's worth of gains with the share price now back where it started a year ago.

Since its price has dipped substantially, Ascend Wellness Holdings' price-to-sales (or "P/S") ratio of 0.5x might make it look like a buy right now compared to the Personal Products industry in Canada, where around half of the companies have P/S ratios above 1.6x and even P/S above 4x are quite common. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

Check out our latest analysis for Ascend Wellness Holdings

What Does Ascend Wellness Holdings' Recent Performance Look Like?

Recent times haven't been great for Ascend Wellness Holdings as its revenue has been rising slower than most other companies. The P/S ratio is probably low because investors think this lacklustre revenue performance isn't going to get any better. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

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

How Is Ascend Wellness Holdings' Revenue Growth Trending?

The only time you'd be truly comfortable seeing a P/S as low as Ascend Wellness Holdings' is when the company's growth is on track to lag the industry.

If we review the last year of revenue growth, the company posted a terrific increase of 28%. The strong recent performance means it was also able to grow revenue by 261% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Shifting to the future, estimates from the eight analysts covering the company suggest revenue should grow by 9.4% each year over the next three years. That's shaping up to be materially higher than the 6.3% each year growth forecast for the broader industry.

In light of this, it's peculiar that Ascend Wellness Holdings' P/S sits below the majority of other companies. It looks like most investors are not convinced at all that the company can achieve future growth expectations.

What Does Ascend Wellness Holdings' P/S Mean For Investors?

Ascend Wellness Holdings' P/S has taken a dip along with its share price. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

Ascend Wellness Holdings' analyst forecasts revealed that its superior revenue outlook isn't contributing to its P/S anywhere near as much as we would have predicted. There could be some major risk factors that are placing downward pressure on the P/S ratio. It appears the market could be anticipating revenue instability, because these conditions should normally provide a boost to the share price.

Having said that, be aware Ascend Wellness Holdings is showing 3 warning signs in our investment analysis, you should know about.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

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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.