Not Many Are Piling Into Oscar Health, Inc. (NYSE:OSCR) Just Yet

There wouldn't be many who think Oscar Health, Inc.'s (NYSE:OSCR) price-to-sales (or "P/S") ratio of 0.7x is worth a mention when the median P/S for the Insurance industry in the United States is similar at about 1x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

See our latest analysis for Oscar Health

What Does Oscar Health's P/S Mean For Shareholders?

Recent times have been advantageous for Oscar Health as its revenues have been rising faster than most other companies. Perhaps the market is expecting this level of performance to taper off, keeping the P/S from soaring. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

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

How Is Oscar Health's Revenue Growth Trending?

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

If we review the last year of revenue growth, the company posted a terrific increase of 45%. The latest three year period has also seen an incredible overall rise in revenue, aided by its incredible short-term performance. Accordingly, shareholders would have been over the moon with those medium-term rates of revenue growth.

Turning to the outlook, the next three years should generate growth of 24% per year as estimated by the four analysts watching the company. With the industry only predicted to deliver 3.7% per annum, the company is positioned for a stronger revenue result.

In light of this, it's curious that Oscar Health's P/S sits in line with the majority of other companies. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.

The Key Takeaway

Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

We've established that Oscar Health currently trades on a lower than expected P/S since its forecasted revenue growth is higher than the wider industry. There could be some risks that the market is pricing in, which is preventing the P/S ratio from matching the positive outlook. This uncertainty seems to be reflected in the share price which, while stable, could be higher given the revenue forecasts.

You should always think about risks. Case in point, we've spotted 2 warning signs for Oscar Health you should be aware of.

If these risks are making you reconsider your opinion on Oscar Health, explore our interactive list of high quality stocks to get an idea of what else is out there.

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.