After Leaping 27% BrainsWay Ltd. (TLV:BWAY) Shares Are Not Flying Under The Radar

BrainsWay Ltd. (TLV:BWAY) shares have continued their recent momentum with a 27% gain in the last month alone. The last month tops off a massive increase of 144% in the last year.

In spite of the firm bounce in price, it's still not a stretch to say that BrainsWay's price-to-sales (or "P/S") ratio of 3.6x right now seems quite "middle-of-the-road" compared to the Medical Equipment industry in Israel, where the median P/S ratio is around 3.3x. 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.

See our latest analysis for BrainsWay

How Has BrainsWay Performed Recently?

With revenue growth that's superior to most other companies of late, BrainsWay has been doing relatively well. Perhaps the market is expecting this level of performance to taper off, keeping the P/S from soaring. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

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

How Is BrainsWay's Revenue Growth Trending?

The only time you'd be comfortable seeing a P/S like BrainsWay's is when the company's growth is tracking the industry closely.

If we review the last year of revenue growth, the company posted a terrific increase of 42%. Pleasingly, revenue has also lifted 39% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Shifting to the future, estimates from the four analysts covering the company suggest revenue should grow by 17% over the next year. Meanwhile, the rest of the industry is forecast to expand by 19%, which is not materially different.

In light of this, it's understandable that BrainsWay's P/S sits in line with the majority of other companies. It seems most investors are expecting to see average future growth and are only willing to pay a moderate amount for the stock.

What We Can Learn From BrainsWay's P/S?

BrainsWay appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry 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.

Our look at BrainsWay's revenue growth estimates show that its P/S is about what we expect, as both metrics follow closely with the industry averages. At this stage investors feel the potential for an improvement or deterioration in revenue isn't great enough to push P/S in a higher or lower direction. If all things remain constant, the possibility of a drastic share price movement remains fairly remote.

Before you settle on your opinion, we've discovered 1 warning sign for BrainsWay that you should be aware of.

If you're unsure about the strength of BrainsWay'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.