Market Might Still Lack Some Conviction On Sonim Technologies, Inc. (NASDAQ:SONM) Even After 26% Share Price Boost

Sonim Technologies, Inc. (NASDAQ:SONM) shares have had a really impressive month, gaining 26% after a shaky period beforehand. But the last month did very little to improve the 55% share price decline over the last year.

In spite of the firm bounce in price, Sonim Technologies may still be sending buy signals at present with its price-to-sales (or "P/S") ratio of 0.3x, considering almost half of all companies in the Tech industry in the United States have P/S ratios greater than 1.4x and even P/S higher than 6x aren't out of the ordinary. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

Check out our latest analysis for Sonim Technologies

What Does Sonim Technologies' Recent Performance Look Like?

Sonim Technologies could be doing better as its revenue has been going backwards lately while most other companies have been seeing positive revenue growth. The P/S ratio is probably low because investors think this poor revenue performance isn't going to get any better. If you still like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

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

How Is Sonim Technologies' Revenue Growth Trending?

Sonim Technologies' P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.

In reviewing the last year of financials, we were disheartened to see the company's revenues fell to the tune of 29%. This has soured the latest three-year period, which nevertheless managed to deliver a decent 27% overall rise in revenue. Although it's been a bumpy ride, it's still fair to say the revenue growth recently has been mostly respectable for the company.

Looking ahead now, revenue is anticipated to climb by 39% during the coming year according to the one analyst following the company. That's shaping up to be materially higher than the 7.7% growth forecast for the broader industry.

In light of this, it's peculiar that Sonim Technologies' P/S sits below the majority of other companies. Apparently some shareholders are doubtful of the forecasts and have been accepting significantly lower selling prices.

What We Can Learn From Sonim Technologies' P/S?

The latest share price surge wasn't enough to lift Sonim Technologies' P/S close to the industry median. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

To us, it seems Sonim Technologies currently trades on a significantly depressed P/S given its forecasted revenue growth is higher than the rest of its industry. The reason for this depressed P/S could potentially be found in the risks the market is pricing in. At least price risks look to be very low, but investors seem to think future revenues could see a lot of volatility.

You should always think about risks. Case in point, we've spotted 4 warning signs for Sonim Technologies you should be aware of.

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