Investors Still Aren't Entirely Convinced By Markforged Holding Corporation's (NYSE:MKFG) Revenues Despite 140% Price Jump

Markforged Holding Corporation (NYSE:MKFG) shareholders would be excited to see that the share price has had a great month, posting a 140% gain and recovering from prior weakness. But the last month did very little to improve the 58% share price decline over the last year.

Even after such a large jump in price, there still wouldn't be many who think Markforged Holding's price-to-sales (or "P/S") ratio of 1.1x is worth a mention when the median P/S in the United States' Machinery industry is similar at about 1.4x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

See our latest analysis for Markforged Holding

What Does Markforged Holding's Recent Performance Look Like?

Markforged Holding could be doing better as its revenue has been going backwards lately while most other companies have been seeing positive revenue growth. One possibility is that the P/S ratio is moderate because investors think this poor revenue performance will turn around. 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 Markforged Holding will help you uncover what's on the horizon.

Is There Some Revenue Growth Forecasted For Markforged Holding?

The only time you'd be comfortable seeing a P/S like Markforged Holding's is when the company's growth is tracking the industry closely.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 17%. This has soured the latest three-year period, which nevertheless managed to deliver a decent 7.4% overall rise in revenue. So we can start by confirming that the company has generally done a good job of growing revenue over that time, even though it had some hiccups along the way.

Looking ahead now, revenue is anticipated to climb by 9.5% during the coming year according to the three analysts following the company. Meanwhile, the rest of the industry is forecast to only expand by 0.6%, which is noticeably less attractive.

With this information, we find it interesting that Markforged Holding 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 Key Takeaway

Its shares have lifted substantially and now Markforged Holding's P/S is back within range of the industry median. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

Despite enticing revenue growth figures that outpace the industry, Markforged Holding's P/S isn't quite what we'd expect. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. This uncertainty seems to be reflected in the share price which, while stable, could be higher given the revenue forecasts.

You should always think about risks. Case in point, we've spotted 4 warning signs for Markforged Holding you should be aware of, and 1 of them is a bit concerning.

If you're unsure about the strength of Markforged Holding'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.