ESS Tech (GWH): Valuation Spotlight After Landmark Arizona Energy Storage Partnership Announcement

ESS Tech (NYSE:GWH) has teamed up with Salt River Project to deploy a 5 megawatt, 50 megawatt-hour iron flow battery system at the Copper Crossing Energy and Research Center in Arizona. This move spotlights non-lithium long-duration energy storage in a real-world setting, with industry partners targeting a late 2027 delivery timeline.

See our latest analysis for ESS Tech.

All eyes have been on ESS Tech’s share price this month, which has soared an astonishing 438% in 30 days and over 400% in the past quarter, fueled in part by momentum from the Copper Crossing deal and a fresh $40 million funding commitment. Still, while the short-term share price return has been explosive, total shareholder return remains negative over both one and three years, hinting that long-term investors have yet to see sustained rewards despite these recent catalysts.

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But with ESS Tech trading well above analyst targets after its parabolic run, investors are left wondering if the current price still leaves room for upside or if the market has already priced in the company’s future growth story.

Price-to-Sales Ratio of 19.7x: Is it justified?

ESS Tech’s shares are currently trading at a Price-to-Sales (P/S) ratio of 19.7x, which positions the stock at a premium compared to peer companies and the wider US Electrical sector.

The Price-to-Sales ratio measures how much investors are willing to pay for each dollar of revenue the company generates. For a business in a high-growth, still unprofitable stage like ESS Tech, investors often tolerate higher multiples as a bet on future expansion in sales or margins as the company matures.

At 19.7x, ESS Tech’s P/S ratio stands well above the peer average of 10x and is even further above the US Electrical industry average of 2.4x. This suggests the market is pricing in aggressive revenue growth or a significant leap in the company’s market share. Without evidence of near-term profitability or sustainable margin improvements, such a premium could indicate expectations that may be difficult for ESS Tech to meet in the short term.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Sales of 19.7x (OVERVALUED)

However, sustaining rapid revenue growth and turning a profit remain major hurdles. These challenges could quickly shift sentiment around ESS Tech's lofty valuation.

Find out about the key risks to this ESS Tech narrative.

Build Your Own ESS Tech Narrative

If you see things differently or want to dig into the numbers yourself, you can put together your own view of ESS Tech in just a few minutes with Do it your way.

A great starting point for your ESS Tech research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.

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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.

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