Navitas Semiconductor Corporation (NASDAQ:NVTS) Stocks Pounded By 25% But Not Lagging Industry On Growth Or Pricing

The Navitas Semiconductor Corporation (NASDAQ:NVTS) share price has fared very poorly over the last month, falling by a substantial 25%. For any long-term shareholders, the last month ends a year to forget by locking in a 65% share price decline.

Although its price has dipped substantially, Navitas Semiconductor may still be sending bearish signals at the moment with its price-to-sales (or "P/S") ratio of 6x, since almost half of all companies in the Semiconductor in the United States have P/S ratios under 4.2x and even P/S lower than 1.7x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the elevated P/S.

Check out our latest analysis for Navitas Semiconductor

How Navitas Semiconductor Has Been Performing

With revenue growth that's inferior to most other companies of late, Navitas Semiconductor has been relatively sluggish. Perhaps the market is expecting future revenue performance to undergo a reversal of fortunes, which has elevated the P/S ratio. If not, then existing shareholders may be very nervous about the viability of the share price.

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

How Is Navitas Semiconductor's Revenue Growth Trending?

In order to justify its P/S ratio, Navitas Semiconductor would need to produce impressive growth in excess of the industry.

If we review the last year of revenue growth, the company posted a terrific increase of 70%. The latest three year period has also seen an incredible overall rise in revenue, aided by its incredible short-term performance. Accordingly, shareholders would have been over the moon with those medium-term rates of revenue growth.

Turning to the outlook, the next three years should generate growth of 34% per year as estimated by the eight analysts watching the company. Meanwhile, the rest of the industry is forecast to only expand by 28% per year, which is noticeably less attractive.

In light of this, it's understandable that Navitas Semiconductor's P/S sits above the majority of other companies. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Key Takeaway

Despite the recent share price weakness, Navitas Semiconductor's P/S remains higher than most other companies in the industry. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

We've established that Navitas Semiconductor maintains its high P/S on the strength of its forecasted revenue growth being higher than the the rest of the Semiconductor industry, as expected. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. Unless the analysts have really missed the mark, these strong revenue forecasts should keep the share price buoyant.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Navitas Semiconductor (1 is significant!) that you need to be mindful of.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.