After Leaping 54% Bloom Energy Corporation (NYSE:BE) Shares Are Not Flying Under The Radar

Bloom Energy Corporation (NYSE:BE) shares have continued their recent momentum with a 54% gain in the last month alone. The last 30 days were the cherry on top of the stock's 969% gain in the last year, which is nothing short of spectacular.

Since its price has surged higher, given around half the companies in the United States' Electrical industry have price-to-sales ratios (or "P/S") below 2.6x, you may consider Bloom Energy as a stock to avoid entirely with its 15.6x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.

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View our latest analysis for Bloom Energy

How Bloom Energy Has Been Performing

With revenue growth that's superior to most other companies of late, Bloom Energy has been doing relatively well. It seems that many are expecting the strong revenue performance to persist, which has raised the P/S. However, if this isn't the case, investors might get caught out paying too much for the stock.

Want the full picture on analyst estimates for the company? Then our free report on Bloom Energy will help you uncover what's on the horizon.

Do Revenue Forecasts Match The High P/S Ratio?

Bloom Energy's P/S ratio would be typical for a company that's expected to deliver very strong growth, and importantly, perform much better than the industry.

Taking a look back first, we see that the company grew revenue by an impressive 23% last year. The latest three year period has also seen an excellent 64% overall rise in revenue, aided by its short-term performance. 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 analysts covering the company suggest revenue should grow by 32% each year over the next three years. With the industry only predicted to deliver 17% per year, the company is positioned for a stronger revenue result.

With this in mind, it's not hard to understand why Bloom Energy's P/S is high relative to its industry peers. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

The Final Word

Bloom Energy's P/S has grown nicely over the last month thanks to a handy boost in the share price. 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.

Our look into Bloom Energy shows that its P/S ratio remains high on the merit of its strong future revenues. At this stage investors feel the potential for a deterioration in revenues is quite remote, justifying the elevated P/S ratio. Unless these conditions change, they will continue to provide strong support to the share price.

Before you take the next step, you should know about the 4 warning signs for Bloom Energy (1 is concerning!) that we have uncovered.

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.