Blue Owl Capital Inc. (NYSE:OWL) Stocks Shoot Up 25% But Its P/S Still Looks Reasonable

Blue Owl Capital Inc. (NYSE:OWL) shareholders would be excited to see that the share price has had a great month, posting a 25% gain and recovering from prior weakness. The last 30 days bring the annual gain to a very sharp 53%.

After such a large jump in price, when almost half of the companies in the United States' Capital Markets industry have price-to-sales ratios (or "P/S") below 3.3x, you may consider Blue Owl Capital as a stock not worth researching with its 5.9x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so lofty.

Check out our latest analysis for Blue Owl Capital

How Blue Owl Capital Has Been Performing

Blue Owl Capital certainly has been doing a good job lately as it's been growing revenue more than most other companies. The P/S is probably high because investors think this strong revenue performance will continue. If not, then existing shareholders might be a little nervous about the viability of the share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Blue Owl Capital.

Is There Enough Revenue Growth Forecasted For Blue Owl Capital?

In order to justify its P/S ratio, Blue Owl Capital would need to produce outstanding growth that's well in excess of the industry.

Taking a look back first, we see that the company grew revenue by an impressive 26% last year. This great performance means it was also able to deliver immense revenue growth over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Looking ahead now, revenue is anticipated to climb by 25% during the coming year according to the nine analysts following the company. Meanwhile, the rest of the industry is forecast to only expand by 6.7%, which is noticeably less attractive.

In light of this, it's understandable that Blue Owl Capital's P/S sits above the majority of other companies. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

The Bottom Line On Blue Owl Capital's P/S

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

As we suspected, our examination of Blue Owl Capital's analyst forecasts revealed that its superior revenue outlook is contributing to its high P/S. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

Don't forget that there may be other risks. For instance, we've identified 3 warning signs for Blue Owl Capital (1 makes us a bit uncomfortable) you should be aware of.

If these risks are making you reconsider your opinion on Blue Owl Capital, 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.