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Market Participants Recognise LightPath Technologies, Inc.'s (NASDAQ:LPTH) Revenues Pushing Shares 28% Higher
LightPath Technologies, Inc. (NASDAQ:LPTH) shares have had a really impressive month, gaining 28% after a shaky period beforehand. But the gains over the last month weren't enough to make shareholders whole, as the share price is still down 3.1% in the last twelve months.
In spite of the firm bounce in price, there still wouldn't be many who think LightPath Technologies' price-to-sales (or "P/S") ratio of 1.8x is worth a mention when the median P/S in the United States' Electronic industry is similar at about 1.7x. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.
See our latest analysis for LightPath Technologies
What Does LightPath Technologies' Recent Performance Look Like?
LightPath Technologies' negative revenue growth of late has neither been better nor worse than most other companies. Perhaps the market is expecting future revenue performance to continue matching the industry, which has kept the P/S in line with expectations. You'd much rather the company improve its revenue if you still believe in the business. At the very least, you'd be hoping that revenue doesn't accelerate downwards if your plan is to pick up some stock while it's not in favour.
Keen to find out how analysts think LightPath Technologies' future stacks up against the industry? In that case, our free report is a great place to start.Do Revenue Forecasts Match The P/S Ratio?
The only time you'd be comfortable seeing a P/S like LightPath Technologies' is when the company's growth is tracking the industry closely.
If we review the last year of revenue, the company posted a result that saw barely any deviation from a year ago. Whilst it's an improvement, it wasn't enough to get the company out of the hole it was in, with revenue down 8.9% overall from three years ago. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.
Shifting to the future, estimates from the four analysts covering the company suggest revenue should grow by 6.4% over the next year. That's shaping up to be similar to the 7.4% growth forecast for the broader industry.
With this information, we can see why LightPath Technologies is trading at a fairly similar P/S to the industry. It seems most investors are expecting to see average future growth and are only willing to pay a moderate amount for the stock.
The Final Word
LightPath Technologies' stock has a lot of momentum behind it lately, which has brought its P/S level with the rest of the industry. Using the price-to-sales ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.
We've seen that LightPath Technologies maintains an adequate P/S seeing as its revenue growth figures match the rest of the industry. Right now shareholders are comfortable with the P/S as they are quite confident future revenue won't throw up any surprises. If all things remain constant, the possibility of a drastic share price movement remains fairly remote.
Plus, you should also learn about these 4 warning signs we've spotted with LightPath Technologies (including 1 which doesn't sit too well with us).
If you're unsure about the strength of LightPath Technologies' 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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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
About NasdaqCM:LPTH
LightPath Technologies
Designs, develops, manufactures, and distributes optical systems and assemblies in the United States.
Flawless balance sheet with low risk.
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