Market Participants Recognise QuickLogic Corporation's (NASDAQ:QUIK) Revenues Pushing Shares 26% Higher

Despite an already strong run, QuickLogic Corporation (NASDAQ:QUIK) shares have been powering on, with a gain of 26% in the last thirty days. The annual gain comes to 159% following the latest surge, making investors sit up and take notice.

After such a large jump in price, QuickLogic may be sending strong sell signals at present with a price-to-sales (or "P/S") ratio of 11.1x, when you consider almost half of the companies in the Semiconductor industry in the United States have P/S ratios under 4x and even P/S lower than 1.6x aren't out of the ordinary. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/S.

See our latest analysis for QuickLogic

How QuickLogic Has Been Performing

With revenue growth that's inferior to most other companies of late, QuickLogic has been relatively sluggish. One possibility is that the P/S ratio is high because investors think this lacklustre revenue performance will improve markedly. If not, then existing shareholders may be very nervous about the viability of the share price.

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

What Are Revenue Growth Metrics Telling Us About The High P/S?

In order to justify its P/S ratio, QuickLogic would need to produce outstanding growth that's well in excess of the industry.

If we review the last year of revenue growth, the company posted a worthy increase of 13%. This was backed up an excellent period prior to see revenue up by 98% in total over the last three years. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Shifting to the future, estimates from the two analysts covering the company suggest revenue should grow by 47% over the next year. That's shaping up to be materially higher than the 40% growth forecast for the broader industry.

In light of this, it's understandable that QuickLogic'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 Final Word

QuickLogic's P/S has grown nicely over the last month thanks to a handy boost in the share price. 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 into QuickLogic shows that its P/S ratio remains high on the merit of its strong future revenues. Right now shareholders are comfortable with the P/S as they are quite confident future revenues aren't under threat. It's hard to see the share price falling strongly in the near future under these circumstances.

We don't want to rain on the parade too much, but we did also find 1 warning sign for QuickLogic that you need to be mindful of.

If you're unsure about the strength of QuickLogic'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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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.