BioHarvest Sciences Inc. (NASDAQ:BHST) Not Flying Under The Radar

When you see that almost half of the companies in the Personal Products industry in the United States have price-to-sales ratios (or "P/S") below 1.5x, BioHarvest Sciences Inc. (NASDAQ:BHST) looks to be giving off strong sell signals with its 3.9x P/S ratio. However, the P/S might be quite high for a reason and it requires further investigation to determine if it's justified.

See our latest analysis for BioHarvest Sciences

How BioHarvest Sciences Has Been Performing

BioHarvest Sciences certainly has been doing a good job lately as it's been growing revenue more than most other companies. 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 BioHarvest Sciences will help you uncover what's on the horizon.

How Is BioHarvest Sciences' Revenue Growth Trending?

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

Taking a look back first, we see that the company grew revenue by an impressive 112% 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.

Shifting to the future, estimates from the three analysts covering the company suggest revenue should grow by 53% each year over the next three years. Meanwhile, the rest of the industry is forecast to only expand by 3.6% per annum, which is noticeably less attractive.

With this in mind, it's not hard to understand why BioHarvest Sciences' P/S is high relative to its industry peers. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

What Does BioHarvest Sciences' P/S Mean For Investors?

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.

We've established that BioHarvest Sciences maintains its high P/S on the strength of its forecasted revenue growth being higher than the the rest of the Personal Products industry, as expected. 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.

Plus, you should also learn about these 3 warning signs we've spotted with BioHarvest Sciences (including 1 which doesn't sit too well with us).

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).

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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.