Surgery Partners, Inc.'s (NASDAQ:SGRY) Share Price Matching Investor Opinion

There wouldn't be many who think Surgery Partners, Inc.'s (NASDAQ:SGRY) price-to-sales (or "P/S") ratio of 1.2x is worth a mention when the median P/S for the Healthcare industry in the United States is very similar. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.

Check out our latest analysis for Surgery Partners

How Has Surgery Partners Performed Recently?

With revenue growth that's inferior to most other companies of late, Surgery Partners has been relatively sluggish. It might be that many expect the uninspiring revenue performance to strengthen positively, which has kept the P/S ratio from falling. You'd really hope so, otherwise you're paying a relatively elevated price for a company with this sort of growth profile.

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

What Are Revenue Growth Metrics Telling Us About The P/S?

In order to justify its P/S ratio, Surgery Partners would need to produce growth that's similar to the industry.

Retrospectively, the last year delivered a decent 8.0% gain to the company's revenues. Pleasingly, revenue has also lifted 47% in aggregate from three years ago, partly thanks to the last 12 months of growth. So we can start by confirming that the company has done a great job of growing revenues over that time.

Shifting to the future, estimates from the ten analysts covering the company suggest revenue should grow by 9.1% per annum over the next three years. That's shaping up to be similar to the 7.6% per annum growth forecast for the broader industry.

With this in mind, it makes sense that Surgery Partners' P/S is closely matching its industry peers. It seems most investors are expecting to see average future growth and are only willing to pay a moderate amount for the stock.

The Bottom Line On Surgery Partners' P/S

It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

A Surgery Partners' P/S seems about right to us given the knowledge that analysts are forecasting a revenue outlook that is similar to the Healthcare industry. Right now shareholders are comfortable with the P/S as they are quite confident future revenue won't throw up any surprises. Unless these conditions change, they will continue to support the share price at these levels.

Don't forget that there may be other risks. For instance, we've identified 1 warning sign for Surgery Partners that you should be aware of.

If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.

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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.