Investors Interested In Mesa Laboratories, Inc.'s (NASDAQ:MLAB) Revenues

With a median price-to-sales (or "P/S") ratio of close to 2.7x in the Life Sciences industry in the United States, you could be forgiven for feeling indifferent about Mesa Laboratories, Inc.'s (NASDAQ:MLAB) P/S ratio, which comes in at about the same. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.

View our latest analysis for Mesa Laboratories

What Does Mesa Laboratories' Recent Performance Look Like?

Recent times have been advantageous for Mesa Laboratories 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 the company manages to stay the course, then investors should be rewarded with a share price that matches its revenue figures.

Want the full picture on analyst estimates for the company? Then our free report on Mesa Laboratories will help you uncover what's on the horizon.

How Is Mesa Laboratories' Revenue Growth Trending?

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

Taking a look back first, we see that the company managed to grow revenues by a handy 12% last year. Pleasingly, revenue has also lifted 45% in aggregate from three years ago, partly thanks to the last 12 months of growth. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Looking ahead now, revenue is anticipated to climb by 4.8% during the coming year according to the four analysts following the company. With the industry predicted to deliver 3.3% growth , the company is positioned for a comparable revenue result.

In light of this, it's understandable that Mesa Laboratories' P/S sits in line with the majority of other companies. It seems most investors are expecting to see average future growth and are only willing to pay a moderate amount for the stock.

What We Can Learn From Mesa Laboratories' P/S?

We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

We've seen that Mesa Laboratories maintains an adequate P/S seeing as its revenue growth figures match the rest of the 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.

The company's balance sheet is another key area for risk analysis. You can assess many of the main risks through our free balance sheet analysis for Mesa Laboratories with six simple checks.

If you're unsure about the strength of Mesa Laboratories' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.