Qorvo, Inc.'s (NASDAQ:QRVO) Prospects Need A Boost To Lift Shares

With a price-to-sales (or "P/S") ratio of 1.9x Qorvo, Inc. (NASDAQ:QRVO) may be sending very bullish signals at the moment, given that almost half of all the Semiconductor companies in the United States have P/S ratios greater than 4.2x and even P/S higher than 10x are not unusual. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so limited.

See our latest analysis for Qorvo

What Does Qorvo's P/S Mean For Shareholders?

Qorvo could be doing better as it's been growing revenue less than most other companies lately. It seems that many are expecting the uninspiring revenue performance to persist, which has repressed the growth of 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 Qorvo.

Do Revenue Forecasts Match The Low P/S Ratio?

In order to justify its P/S ratio, Qorvo would need to produce anemic growth that's substantially trailing the industry.

Retrospectively, the last year delivered a decent 9.7% gain to the company's revenues. However, this wasn't enough as the latest three year period has seen an unpleasant 17% overall drop in revenue. Therefore, it's fair to say the revenue growth recently has been undesirable for the company.

Turning to the outlook, the next three years should generate growth of 2.7% each year as estimated by the analysts watching the company. With the industry predicted to deliver 25% growth each year, the company is positioned for a weaker revenue result.

With this in consideration, its clear as to why Qorvo's P/S is falling short industry peers. It seems most investors are expecting to see limited future growth and are only willing to pay a reduced amount for the stock.

What Does Qorvo's 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.

We've established that Qorvo 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. It's hard to see the share price rising strongly in the near future under these circumstances.

You always need to take note of risks, for example - Qorvo has 1 warning sign we think you should be aware of.

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