After Leaping 25% i-80 Gold Corp. (TSE:IAU) Shares Are Not Flying Under The Radar

i-80 Gold Corp. (TSE:IAU) shares have continued their recent momentum with a 25% gain in the last month alone. The last month tops off a massive increase of 107% in the last year.

Following the firm bounce in price, i-80 Gold may be sending very bearish signals at the moment with a price-to-sales (or "P/S") ratio of 10.2x, since almost half of all companies in the Metals and Mining industry in Canada have P/S ratios under 6.2x and even P/S lower than 2x are not unusual. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.

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Check out our latest analysis for i-80 Gold

How Has i-80 Gold Performed Recently?

Recent times have been advantageous for i-80 Gold as its revenues have been rising faster than most other companies. It seems the market expects this form will continue into the future, hence the elevated P/S ratio. If not, then existing shareholders might be a little nervous about the viability of the share price.

Keen to find out how analysts think i-80 Gold's future stacks up against the industry? In that case, our free report is a great place to start.

Do Revenue Forecasts Match The High P/S Ratio?

i-80 Gold's P/S ratio would be typical for a company that's expected to deliver very strong growth, and importantly, perform much better than the industry.

Retrospectively, the last year delivered an exceptional 83% gain to the company's top line. The strong recent performance means it was also able to grow revenue by 284% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Looking ahead now, revenue is anticipated to climb by 68% each year during the coming three years according to the three analysts following the company. That's shaping up to be materially higher than the 22% per annum growth forecast for the broader industry.

With this in mind, it's not hard to understand why i-80 Gold's P/S is high relative to its industry peers. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Bottom Line On i-80 Gold's P/S

The strong share price surge has lead to i-80 Gold's P/S soaring as well. 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 i-80 Gold maintains its high P/S on the strength of its forecasted revenue growth being higher than the the rest of the Metals and Mining industry, as expected. At this stage investors feel the potential for a deterioration in revenues is quite remote, justifying the elevated P/S ratio. Unless these conditions change, they will continue to provide strong support to the share price.

It's always necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with i-80 Gold, and understanding them should be part of your investment process.

If you're unsure about the strength of i-80 Gold's 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.