Investors Still Aren't Entirely Convinced By Bowman Consulting Group Ltd.'s (NASDAQ:BWMN) Revenues Despite 29% Price Jump

Bowman Consulting Group Ltd. (NASDAQ:BWMN) shareholders would be excited to see that the share price has had a great month, posting a 29% gain and recovering from prior weakness. The bad news is that even after the stocks recovery in the last 30 days, shareholders are still underwater by about 8.1% over the last year.

In spite of the firm bounce in price, you could still be forgiven for feeling indifferent about Bowman Consulting Group's P/S ratio of 1.2x, since the median price-to-sales (or "P/S") ratio for the Construction industry in the United States is about the same. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

Check out our latest analysis for Bowman Consulting Group

How Has Bowman Consulting Group Performed Recently?

With revenue growth that's superior to most other companies of late, Bowman Consulting Group 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.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Bowman Consulting Group.

How Is Bowman Consulting Group's Revenue Growth Trending?

In order to justify its P/S ratio, Bowman Consulting Group would need to produce growth that's similar to the industry.

Taking a look back first, we see that the company grew revenue by an impressive 24% last year. Pleasingly, revenue has also lifted 195% 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.

Looking ahead now, revenue is anticipated to climb by 15% during the coming year according to the six analysts following the company. Meanwhile, the rest of the industry is forecast to only expand by 10%, which is noticeably less attractive.

With this information, we find it interesting that Bowman Consulting Group is trading at a fairly similar P/S compared to the industry. It may be that most investors aren't convinced the company can achieve future growth expectations.

The Bottom Line On Bowman Consulting Group's P/S

Bowman Consulting Group appears to be back in favour with a solid price jump bringing its P/S back in line with other companies in the industry Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

Looking at Bowman Consulting Group's analyst forecasts revealed that its superior revenue outlook isn't giving the boost to its P/S that we would've expected. When we see a strong revenue outlook, with growth outpacing the industry, we can only assume potential uncertainty around these figures are what might be placing slight pressure on the P/S ratio. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.

Plus, you should also learn about this 1 warning sign we've spotted with Bowman Consulting Group.

If you're unsure about the strength of Bowman Consulting Group'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.