Flywire Corporation (NASDAQ:FLYW) Stocks Shoot Up 32% But Its P/S Still Looks Reasonable

The Flywire Corporation (NASDAQ:FLYW) share price has done very well over the last month, posting an excellent gain of 32%. While recent buyers may be laughing, long-term holders might not be as pleased since the recent gain only brings the stock back to where it started a year ago.

After such a large jump in price, you could be forgiven for thinking Flywire is a stock to steer clear of with a price-to-sales ratios (or "P/S") of 6x, considering almost half the companies in the United States' Diversified Financial industry have P/S ratios below 2.8x. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.

Check out our latest analysis for Flywire

How Has Flywire Performed Recently?

With revenue growth that's superior to most other companies of late, Flywire 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 Flywire will help you uncover what's on the horizon.

Is There Enough Revenue Growth Forecasted For Flywire?

The only time you'd be truly comfortable seeing a P/S as steep as Flywire's is when the company's growth is on track to outshine the industry decidedly.

If we review the last year of revenue growth, the company posted a terrific increase of 27%. The latest three year period has also seen an excellent 160% 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 22% each year over the next three years. That's shaping up to be materially higher than the 8.8% per annum growth forecast for the broader industry.

With this information, we can see why Flywire is trading at such a high P/S compared to the industry. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

What Does Flywire's P/S Mean For Investors?

Shares in Flywire have seen a strong upwards swing lately, which has really helped boost its P/S figure. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

As we suspected, our examination of Flywire's analyst forecasts revealed that its superior revenue outlook is contributing to its high P/S. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. Unless these conditions change, they will continue to provide strong support to the share price.

Plus, you should also learn about these 2 warning signs we've spotted with Flywire.

If these risks are making you reconsider your opinion on Flywire, 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.