NextNRG Inc.'s (NASDAQ:NXXT) 29% Jump Shows Its Popularity With Investors

NextNRG Inc. (NASDAQ:NXXT) shareholders are no doubt pleased to see that the share price has bounced 29% in the last month, although it is still struggling to make up recently lost ground. Not all shareholders will be feeling jubilant, since the share price is still down a very disappointing 36% in the last twelve months.

Since its price has surged higher, given around half the companies in the United States' Oil and Gas industry have price-to-sales ratios (or "P/S") below 1.5x, you may consider NextNRG as a stock to avoid entirely with its 5.1x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.

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View our latest analysis for NextNRG

How Has NextNRG Performed Recently?

Recent revenue growth for NextNRG has been in line with the industry. One possibility is that the P/S ratio is high because investors think this modest revenue performance will accelerate. However, if this isn't the case, investors might get caught out paying too much for the stock.

Keen to find out how analysts think NextNRG's future stacks up against the industry? In that case, our free report is a great place to start.

Is There Enough Revenue Growth Forecasted For NextNRG?

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

Retrospectively, the last year delivered an exceptional 92% gain to the company's top line. The latest three year period has also seen an incredible overall rise in revenue, aided by its incredible short-term performance. 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 36% each year during the coming three years according to the sole analyst following the company. With the industry only predicted to deliver 4.4% each year, the company is positioned for a stronger revenue result.

With this information, we can see why NextNRG 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.

The Bottom Line On NextNRG's P/S

Shares in NextNRG 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.

We've established that NextNRG maintains its high P/S on the strength of its forecasted revenue growth being higher than the the rest of the Oil and Gas industry, as expected. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. It's hard to see the share price falling strongly in the near future under these circumstances.

Before you take the next step, you should know about the 4 warning signs for NextNRG (2 can't be ignored!) that we have uncovered.

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