Cardlytics, Inc.'s (NASDAQ:CDLX) Stock Retreats 30% But Revenues Haven't Escaped The Attention Of Investors

The Cardlytics, Inc. (NASDAQ:CDLX) share price has softened a substantial 30% over the previous 30 days, handing back much of the gains the stock has made lately. Still, a bad month hasn't completely ruined the past year with the stock gaining 59%, which is great even in a bull market.

Even after such a large drop in price, there still wouldn't be many who think Cardlytics' price-to-sales (or "P/S") ratio of 1.4x is worth a mention when the median P/S in the United States' Media industry 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 Cardlytics

What Does Cardlytics' Recent Performance Look Like?

There hasn't been much to differentiate Cardlytics' and the industry's revenue growth lately. It seems that many are expecting the mediocre revenue performance to persist, which has held the P/S ratio back. If you like the company, you'd be hoping this can at least be maintained so that you could pick up some stock while it's not quite in favour.

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

How Is Cardlytics' Revenue Growth Trending?

The only time you'd be comfortable seeing a P/S like Cardlytics' is when the company's growth is tracking the industry closely.

Retrospectively, the last year delivered a decent 5.9% gain to the company's revenues. Pleasingly, revenue has also lifted 61% in aggregate from three years ago, partly thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Turning to the outlook, the next year should generate growth of 5.8% as estimated by the three analysts watching the company. With the industry predicted to deliver 4.5% growth , the company is positioned for a comparable revenue result.

With this in mind, it makes sense that Cardlytics' P/S is closely matching its industry peers. Apparently shareholders are comfortable to simply hold on while the company is keeping a low profile.

The Key Takeaway

Cardlytics' plummeting stock price has brought its P/S back to a similar region as the rest of the industry. 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.

Our look at Cardlytics' revenue growth estimates show that its P/S is about what we expect, as both metrics follow closely with the industry averages. At this stage investors feel the potential for an improvement or deterioration in revenue isn't great enough to push P/S in a higher or lower direction. If all things remain constant, the possibility of a drastic share price movement remains fairly remote.

And what about other risks? Every company has them, and we've spotted 3 warning signs for Cardlytics (of which 1 shouldn't be ignored!) you should know about.

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