indie Semiconductor, Inc.'s (NASDAQ:INDI) Price Is Right But Growth Is Lacking After Shares Rocket 31%

indie Semiconductor, Inc. (NASDAQ:INDI) shareholders are no doubt pleased to see that the share price has bounced 31% in the last month, although it is still struggling to make up recently lost ground. Still, the 30-day jump doesn't change the fact that longer term shareholders have seen their stock decimated by the 60% share price drop in the last twelve months.

Although its price has surged higher, indie Semiconductor may still be sending buy signals at present with its price-to-sales (or "P/S") ratio of 2.4x, considering almost half of all companies in the Semiconductor industry in the United States have P/S ratios greater than 3.6x and even P/S higher than 9x aren't out of the ordinary. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

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Check out our latest analysis for indie Semiconductor

What Does indie Semiconductor's Recent Performance Look Like?

While the industry has experienced revenue growth lately, indie Semiconductor's revenue has gone into reverse gear, which is not great. It seems that many are expecting the poor revenue performance to persist, which has repressed the P/S ratio. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

If you'd like to see what analysts are forecasting going forward, you should check out our free report on indie Semiconductor.

How Is indie Semiconductor's Revenue Growth Trending?

In order to justify its P/S ratio, indie Semiconductor would need to produce sluggish growth that's trailing the industry.

Retrospectively, the last year delivered a frustrating 7.1% 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 251% in total over the last three years. Accordingly, while they would have preferred to keep the run going, shareholders would definitely welcome the medium-term rates of revenue growth.

Shifting to the future, estimates from the six analysts covering the company suggest revenue should grow by 12% over the next year. Meanwhile, the rest of the industry is forecast to expand by 30%, which is noticeably more attractive.

In light of this, it's understandable that indie Semiconductor's P/S sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on while the company is potentially eyeing a less prosperous future.

The Bottom Line On indie Semiconductor's P/S

The latest share price surge wasn't enough to lift indie Semiconductor's P/S close to the industry median. 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.

We've established that indie Semiconductor maintains its low P/S on the weakness of its forecast growth being lower than the wider industry, as expected. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

Before you take the next step, you should know about the 2 warning signs for indie Semiconductor that we have uncovered.

If you're unsure about the strength of indie Semiconductor's 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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