RumbleOn, Inc. (NASDAQ:RMBL) Stocks Pounded By 26% But Not Lagging Industry On Growth Or Pricing

To the annoyance of some shareholders, RumbleOn, Inc. (NASDAQ:RMBL) shares are down a considerable 26% in the last month, which continues a horrid run for the company. For any long-term shareholders, the last month ends a year to forget by locking in a 67% share price decline.

Although its price has dipped substantially, it's still not a stretch to say that RumbleOn's price-to-sales (or "P/S") ratio of 0.1x right now seems quite "middle-of-the-road" compared to the Specialty Retail industry in the United States, where the median P/S ratio is around 0.4x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

See our latest analysis for RumbleOn

What Does RumbleOn's Recent Performance Look Like?

RumbleOn hasn't been tracking well recently as its declining revenue compares poorly to other companies, which have seen some growth in their revenues on average. One possibility is that the P/S ratio is moderate because investors think this poor revenue performance will turn around. If not, then existing shareholders may be a little nervous about the viability of the share price.

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

Is There Some Revenue Growth Forecasted For RumbleOn?

There's an inherent assumption that a company should be matching the industry for P/S ratios like RumbleOn's to be considered reasonable.

Retrospectively, the last year delivered a frustrating 8.2% decrease to the company's top line. However, a few very strong years before that means that it was still able to grow revenue by an impressive 256% in total over the last three years. So we can start by confirming that the company has generally done a very good job of growing revenue over that time, even though it had some hiccups along the way.

Turning to the outlook, the next three years should generate growth of 6.8% per year as estimated by the five analysts watching the company. That's shaping up to be similar to the 5.7% each year growth forecast for the broader industry.

With this in mind, it makes sense that RumbleOn's 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

Following RumbleOn's share price tumble, its P/S is just clinging on to the industry median P/S. Generally, our preference is to limit the use of the price-to-sales ratio to establishing what the market thinks about the overall health of a company.

Our look at RumbleOn's 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. Unless these conditions change, they will continue to support the share price at these levels.

Plus, you should also learn about these 2 warning signs we've spotted with RumbleOn (including 1 which is a bit concerning).

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

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com