With BioLife Solutions, Inc. (NASDAQ:BLFS) It Looks Like You'll Get What You Pay For

When you see that almost half of the companies in the Life Sciences industry in the United States have price-to-sales ratios (or "P/S") below 2.8x, BioLife Solutions, Inc. (NASDAQ:BLFS) looks to be giving off strong sell signals with its 13.6x 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.

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View our latest analysis for BioLife Solutions

What Does BioLife Solutions' Recent Performance Look Like?

BioLife Solutions certainly has been doing a good job lately as it's been growing revenue more than most other companies. It seems the market expects this form will continue into the future, hence the elevated P/S ratio. If not, then existing shareholders might be a little nervous about the viability of the share price.

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How Is BioLife Solutions' Revenue Growth Trending?

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

Retrospectively, the last year delivered a decent 8.4% gain to the company's revenues. Ultimately though, it couldn't turn around the poor performance of the prior period, with revenue shrinking 31% in total over the last three years. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

Looking ahead now, revenue is anticipated to climb by 22% per year during the coming three years according to the nine analysts following the company. With the industry only predicted to deliver 6.4% per annum, the company is positioned for a stronger revenue result.

With this in mind, it's not hard to understand why BioLife Solutions' 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 BioLife Solutions' P/S Mean For Investors?

Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

Our look into BioLife Solutions shows that its P/S ratio remains high on the merit of its strong future revenues. At this stage investors feel the potential for a deterioration in revenues is quite remote, justifying the elevated P/S ratio. Unless these conditions change, they will continue to provide strong support to the share price.

A lot of potential risks can sit within a company's balance sheet. Take a look at our free balance sheet analysis for BioLife Solutions with six simple checks on some of these key factors.

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