Revenues Tell The Story For FTAI Aviation Ltd. (NASDAQ:FTAI) As Its Stock Soars 30%

Despite an already strong run, FTAI Aviation Ltd. (NASDAQ:FTAI) shares have been powering on, with a gain of 30% in the last thirty days. The last 30 days were the cherry on top of the stock's 318% gain in the last year, which is nothing short of spectacular.

Since its price has surged higher, you could be forgiven for thinking FTAI Aviation is a stock to steer clear of with a price-to-sales ratios (or "P/S") of 10.9x, considering almost half the companies in the United States' Trade Distributors industry have P/S ratios below 1x. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.

Check out our latest analysis for FTAI Aviation

How FTAI Aviation Has Been Performing

Recent times have been advantageous for FTAI Aviation as its revenues have been rising faster than most other companies. The P/S is probably high because investors think this strong revenue performance will continue. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

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

Is There Enough Revenue Growth Forecasted For FTAI Aviation?

There's an inherent assumption that a company should far outperform the industry for P/S ratios like FTAI Aviation's to be considered reasonable.

Taking a look back first, we see that the company grew revenue by an impressive 28% last year. Spectacularly, three year revenue growth has ballooned by several orders of magnitude, thanks in part to the last 12 months of revenue growth. 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 20% per year during the coming three years according to the ten analysts following the company. With the industry only predicted to deliver 6.0% per year, the company is positioned for a stronger revenue result.

With this information, we can see why FTAI Aviation is trading at such a high P/S compared to the industry. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Bottom Line On FTAI Aviation's P/S

Shares in FTAI Aviation have seen a strong upwards swing lately, which has really helped boost its P/S figure. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

We've established that FTAI Aviation maintains its high P/S on the strength of its forecasted revenue growth being higher than the the rest of the Trade Distributors industry, as expected. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. It's hard to see the share price falling strongly in the near future under these circumstances.

It is also worth noting that we have found 1 warning sign for FTAI Aviation that you need to take into consideration.

It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).

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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.