Not Many Are Piling Into PowerFleet, Inc. (NASDAQ:AIOT) Stock Yet As It Plummets 26%

PowerFleet, Inc. (NASDAQ:AIOT) shareholders that were waiting for something to happen have been dealt a blow with a 26% share price drop in the last month. The recent drop has obliterated the annual return, with the share price now down 2.0% over that longer period.

In spite of the heavy fall in price, you could still be forgiven for feeling indifferent about PowerFleet's P/S ratio of 2x, since the median price-to-sales (or "P/S") ratio for the Electronic industry in the United States is also close to 1.7x. 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.

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View our latest analysis for PowerFleet

What Does PowerFleet's Recent Performance Look Like?

PowerFleet certainly has been doing a good job lately as it's been growing revenue more than most other companies. It might be that many expect the strong revenue performance to wane, which has kept the P/S ratio from rising. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

Keen to find out how analysts think PowerFleet'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 PowerFleet?

The only time you'd be comfortable seeing a P/S like PowerFleet's is when the company's growth is tracking the industry closely.

If we review the last year of revenue growth, the company posted a terrific increase of 119%. Pleasingly, revenue has also lifted 133% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.

Shifting to the future, estimates from the seven analysts covering the company suggest revenue should grow by 44% over the next year. With the industry only predicted to deliver 11%, the company is positioned for a stronger revenue result.

With this information, we find it interesting that PowerFleet is trading at a fairly similar P/S compared to the industry. It may be that most investors aren't convinced the company can achieve future growth expectations.

The Final Word

PowerFleet's plummeting stock price has brought its P/S back to a similar region as the rest of the industry. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

Despite enticing revenue growth figures that outpace the industry, PowerFleet's P/S isn't quite what we'd expect. Perhaps uncertainty in the revenue forecasts are what's keeping the P/S ratio consistent with the rest of the industry. It appears some are indeed anticipating revenue instability, because these conditions should normally provide a boost to the share price.

You need to take note of risks, for example - PowerFleet has 3 warning signs (and 1 which is concerning) we think you should know about.

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.