With A 49% Price Drop For Intuitive Machines, Inc. (NASDAQ:LUNR) You'll Still Get What You Pay For

Unfortunately for some shareholders, the Intuitive Machines, Inc. (NASDAQ:LUNR) share price has dived 49% in the last thirty days, prolonging recent pain. Longer-term, the stock has been solid despite a difficult 30 days, gaining 18% in the last year.

In spite of the heavy fall in price, you could still be forgiven for thinking Intuitive Machines is a stock not worth researching with a price-to-sales ratios (or "P/S") of 3.8x, considering almost half the companies in the United States' Aerospace & Defense industry have P/S ratios below 2.1x. However, the P/S might be high for a reason and it requires further investigation to determine if it's justified.

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What Does Intuitive Machines' P/S Mean For Shareholders?

With revenue growth that's superior to most other companies of late, Intuitive Machines has been doing relatively well. It seems that many are expecting the strong revenue performance to persist, which has raised the P/S. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

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

How Is Intuitive Machines' Revenue Growth Trending?

Intuitive Machines' P/S ratio would be typical for a company that's expected to deliver solid growth, and importantly, perform better than the industry.

Taking a look back first, we see that the company grew revenue by an impressive 187% last year. Pleasingly, revenue has also lifted 214% in aggregate from three years ago, thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing revenue over that time.

Shifting to the future, estimates from the seven analysts covering the company suggest revenue should grow by 25% each year over the next three years. That's shaping up to be materially higher than the 7.7% per annum growth forecast for the broader industry.

In light of this, it's understandable that Intuitive Machines' P/S sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Key Takeaway

Despite the recent share price weakness, Intuitive Machines' P/S remains higher than most other companies in the industry. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

We've established that Intuitive Machines maintains its high P/S on the strength of its forecasted revenue growth being higher than the the rest of the Aerospace & Defense industry, as expected. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

Having said that, be aware Intuitive Machines is showing 2 warning signs in our investment analysis, you should know about.

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

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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.