Rush Street Interactive, Inc. (NYSE:RSI) Stock Rockets 29% But Many Are Still Ignoring The Company

Despite an already strong run, Rush Street Interactive, Inc. (NYSE:RSI) shares have been powering on, with a gain of 29% in the last thirty days. The last month tops off a massive increase of 131% in the last year.

Even after such a large jump in price, Rush Street Interactive's price-to-sales (or "P/S") ratio of 0.8x might still make it look like a buy right now compared to the Hospitality industry in the United States, where around half of the companies have P/S ratios above 1.4x and even P/S above 4x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

See our latest analysis for Rush Street Interactive

How Rush Street Interactive Has Been Performing

Rush Street Interactive could be doing better as it's been growing revenue less than most other companies lately. The P/S ratio is probably low because investors think this lacklustre revenue performance isn't going to get any better. If you still like the company, you'd be hoping revenue doesn't get any worse and that you could pick up some stock while it's out of favour.

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

How Is Rush Street Interactive's Revenue Growth Trending?

In order to justify its P/S ratio, Rush Street Interactive would need to produce sluggish growth that's trailing the industry.

Retrospectively, the last year delivered an exceptional 17% gain to the company's top line. Pleasingly, revenue has also lifted 148% 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 nine analysts covering the company suggest revenue should grow by 13% per year over the next three years. With the industry predicted to deliver 11% growth per year, the company is positioned for a comparable revenue result.

With this in consideration, we find it intriguing that Rush Street Interactive's P/S is lagging behind its industry peers. Apparently some shareholders are doubtful of the forecasts and have been accepting lower selling prices.

The Bottom Line On Rush Street Interactive's P/S

The latest share price surge wasn't enough to lift Rush Street Interactive's P/S close to the industry median. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

It looks to us like the P/S figures for Rush Street Interactive remain low despite growth that is expected to be in line with other companies in the industry. Despite average revenue growth estimates, there could be some unobserved threats keeping the P/S low. It appears some are indeed anticipating revenue instability, because these conditions should normally provide more support to the share price.

Plus, you should also learn about this 1 warning sign we've spotted with Rush Street Interactive.

If you're unsure about the strength of Rush Street Interactive'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.