Goodness Growth Holdings, Inc. (CSE:GDNS) Stock Rockets 30% But Many Are Still Ignoring The Company

Despite an already strong run, Goodness Growth Holdings, Inc. (CSE:GDNS) shares have been powering on, with a gain of 30% in the last thirty days. The last month tops off a massive increase of 229% in the last year.

Although its price has surged higher, Goodness Growth Holdings may still be sending buy signals at present with its price-to-sales (or "P/S") ratio of 0.7x, considering almost half of all companies in the Pharmaceuticals industry in Canada have P/S ratios greater than 1.5x and even P/S higher than 4x aren't out of the ordinary. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.

Check out our latest analysis for Goodness Growth Holdings

What Does Goodness Growth Holdings' Recent Performance Look Like?

Recent times have been advantageous for Goodness Growth Holdings as its revenues have been rising faster than most other companies. One possibility is that the P/S ratio is low because investors think this strong revenue performance might be less impressive moving forward. If the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.

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

How Is Goodness Growth Holdings' Revenue Growth Trending?

Goodness Growth Holdings' P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.

Taking a look back first, we see that the company grew revenue by an impressive 18% last year. The latest three year period has also seen an excellent 79% overall rise in revenue, aided by its short-term performance. 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 14% during the coming year according to the one analyst following the company. That's shaping up to be materially higher than the 5.3% growth forecast for the broader industry.

With this information, we find it odd that Goodness Growth Holdings is trading at a P/S lower than the industry. It looks like most investors are not convinced at all that the company can achieve future growth expectations.

What Does Goodness Growth Holdings' P/S Mean For Investors?

Despite Goodness Growth Holdings' share price climbing recently, its P/S still lags most other companies. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

A look at Goodness Growth Holdings' revenues reveals that, despite glowing future growth forecasts, its P/S is much lower than we'd expect. There could be some major risk factors that are placing downward pressure on the P/S ratio. While the possibility of the share price plunging seems unlikely due to the high growth forecasted for the company, the market does appear to have some hesitation.

It's always necessary to consider the ever-present spectre of investment risk. We've identified 6 warning signs with Goodness Growth Holdings (at least 3 which are a bit unpleasant), and understanding these should be part of your investment process.

If these risks are making you reconsider your opinion on Goodness Growth Holdings, explore our interactive list of high quality stocks to get an idea of what else is out there.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.