After Leaping 25% ClearPoint Neuro, Inc. (NASDAQ:CLPT) Shares Are Not Flying Under The Radar

ClearPoint Neuro, Inc. (NASDAQ:CLPT) shares have continued their recent momentum with a 25% gain in the last month alone. The annual gain comes to 147% following the latest surge, making investors sit up and take notice.

Since its price has surged higher, ClearPoint Neuro may be sending very bearish signals at the moment with a price-to-sales (or "P/S") ratio of 16.7x, since almost half of all companies in the Medical Equipment industry in the United States have P/S ratios under 3.6x and even P/S lower than 1.2x are not unusual. 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.

See our latest analysis for ClearPoint Neuro

How Has ClearPoint Neuro Performed Recently?

With revenue growth that's superior to most other companies of late, ClearPoint Neuro has been doing relatively well. It seems that many are expecting the strong revenue performance to persist, which has raised the P/S. If not, then existing shareholders might be a little nervous about the viability of the share price.

Want the full picture on analyst estimates for the company? Then our free report on ClearPoint Neuro will help you uncover what's on the horizon.

How Is ClearPoint Neuro's Revenue Growth Trending?

There's an inherent assumption that a company should far outperform the industry for P/S ratios like ClearPoint Neuro's to be considered reasonable.

Retrospectively, the last year delivered an exceptional 36% gain to the company's top line. The strong recent performance means it was also able to grow revenue by 93% in total over the last three years. So we can start by confirming that the company has done a great job of growing revenue over that time.

Turning to the outlook, the next year should generate growth of 22% as estimated by the three analysts watching the company. Meanwhile, the rest of the industry is forecast to only expand by 8.9%, which is noticeably less attractive.

In light of this, it's understandable that ClearPoint Neuro'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.

What We Can Learn From ClearPoint Neuro's P/S?

The strong share price surge has lead to ClearPoint Neuro's P/S soaring as well. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

Our look into ClearPoint Neuro shows that its P/S ratio remains high on the merit of its strong future revenues. It appears that shareholders are confident in the company's future revenues, which is propping up the P/S. It's hard to see the share price falling strongly in the near future under these circumstances.

There are also other vital risk factors to consider before investing and we've discovered 2 warning signs for ClearPoint Neuro that you should be aware of.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.